PHC restrains govt from increasing gas tariff

PESHAWAR: The Peshawar High Court (PHC) has restrained the federal government and the Oil and Gas Regulatory Authority (Ogra) till the next order from undertaking 69 percent increase in the natural gas tariff for industrial units.

A division bench comprising Justice Waqar Ahmad Seth and Justice Ikramullah Khan issued the restraining order in a writ petition of Sarhad Textile Mills Limited, Gadoon Textile Mills Limited, Babri Cotton Mills Limited, Bannu Woollen Mills Limited, Rahman Cotton Mills Limited and others.The bench also issued notice to the federal government, Ogra and SNGPL directing them to submit reply in the case.

During the hearing of the case, Shumail Ahmad Butt submitted that the SNGPL intended to expand its transmission and distribution system without ensuring firm gas supply arrangements in the province.

“The proposed operating cost of Rs35 billion in 2016-17 as compared to Rs22 billion determined for financial year 2015-16 showed an increase of almost 60 percent that sounds grossly overstated and required a careful review by  Oil and Gas Regulatory Authority,” he said.

Unfortunately, he added, the Ogra ignored all the observations of the Pakistan Textile Mills Associations on a petition of SNGPL through different interventions and allowed the petition and proposed to raise the industrial tariff almost 69 percent without any justification on October 6, 2016.

The lawyer submitted that such a huge raise in tariff will definitely destroy the textile industry and the textile manufacturers will not be able to compete in the international market.The lawyer pointed out that the SNGPL in its petition for Determination of Estimated Revenue Requirement (DERR) for 2016-17 had not asked for revenue shortfall pertaining to the financial year 2015-16.

He said it was shocking that while deciding the Determination of Estimated
Revenue Requirement, the Ogra without caring to elaborate its decision or giving any cogent or plausible reasons, allowed a staggeringly outlandish sum of Rs44,743 million to SNGPL.He said Ogra showed dictatorship in its decision to mention the allowance of Rs44,743 million as revenue shortfall or prior year adjustment.

He said the regulatory parlance would translate into an increase in the average prescribed price by Rs106.83 per MMBTU.He said that allowing the shortfall amounts to rewarding SNGPL for remaining delinquent, inefficient, underperforming and not meeting the targets set during Determination of Estimated Revenue Requirement  2015-16.

He noted that Ogra determined the average prescribed price at Rs480.63 per
MMBTU, but is adamant to charge the industrial consumers with a proposed price of Rs814.64 which is 69 percent higher than the average sale price.

“It would be important to highlight that the industrial consumers of Punjab have mostly shifted to RLNG and are already insulated from such increase; therefore, the SNGPL would pass on entire burden of cross-subsidy to the industrial consumers of Khyber Pakhtunkhwa, which has no legal sanctity and amounts to discrimination,” the petition claimed.

“It is also highly discriminatory that in the same country, prices of another Gas Utility Company have been determined by  Oil and Gas Regulatory Authority at much lower rates,” it states.It requested the court to set aside the impugned decision/determination and consequent increase.