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January 1, 2015

Increase in UF gas benchmark challenged in IHC


January 1, 2015

Justice Athar Minallah of the Islamabad High Court (IHC) here Wednesday issued notices to the respondents after a petitioner challenged the increase in unaccounted for gas (UFG) benchmark from 4.5 to 9 per cent that as per petitioner will cause huge loss to the public of Pakistan.
The petitioner, Farrukh Dall advocate has cited federation of Pakistan through secretary cabinet division, ministry of petroleum and natural resources, ministry of finance and oil & gas regulatory authority (OGRA) as respondents.
IHC bench issuing notices to the above said respondents also issued notices to the attorney general of Pakistan seeking comments within fortnight.
The petitioner said that the Constitution of Pakistan is not silent on issues which affect economic life of the nation and its citizens. The Constitution contains a whole range of articles 3, 4 and 5(2) 9, 14, 18, 23 and 24 which have a direct nexus with good economic governance and fundamental rights.
“That the UFG benchmark of 4.5% was fixed by Ogra for Sui Northern Gas Pipelines Ltd (SNGPL) and Sui Southern Gas Company Ltd (SSGCL) for fiscal year 2011-12 to 2014-15 whereas through an illegal decision petroleum ministry and Ogra are trying to increase UFG benchmark from 4.5 per cent to 9 per cent on the pretext of non-consumers ‘gas theft, law and order situation and bulk/retail ratio which is illegal/unlawful act on their part. This is being done by them despite Prime Minister's deferment for change in the gas pricing mechanism that is estimated to increase consumers tariff significantly,” he said.
The combined impact to the consumers would be Rs65-70 billion if the decision is implemented. In fact 4.5 per cent UFG benchmark fixed by Ogra in the consumer tariff was meant to reasonably cover the cost of pilferage, leakage, loss in security situation and all other difficulties.
The petitioner argued that petroleum ministry and ECC was not legally empowered to issue

policy guidelines on UFG and provision of doubt debts in the first place as it is a direct jurisdiction of Ogra, which it has been exercising since its inception in 2002. The government and regulator are obligated to launch the campaign against gas theft rather passing the theft of gas to the consumers.
The petitioner said that the Supreme Court of Pakistan through a November 25, 2011 judgment had shown serious concern on high UFG of 11 per cent on SNGPL system and 9.5 per cent on SSGCL system and also referred the matter of increasing UFG benchmark from 5 per cent to 7 per cent for year 2009-2010 to NAB for investigation.
The petitioner further argued that rectification of gas leakages is the core responsibility of the company to which any negligence is not entertainable as gas leakages are clearly as controllable factor.
Theft of gas has contributed towards increase of UFG but the same should have been curtailed after the promulgation of Criminal Amendment Act, 2011. The petitioner has prayed to the IHC to declare the increase in UFG illegal and unlawful.

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