CNG dealers move high court against 40pc gas price hike

The Sindh High Court (SHC) on Tuesday issued notices to the Ministry of Energy (Petroleum Division), the Oil & Gas Regulatory Authority (Ogra) and others on a petition against the government’s decision to increase the sale price of natural gas for the compressed natural gas (CNG) sector by 40 per cent.

The Sindh Petroleum and the CNG Dealers Association stated in their petition that Ogra had issued a notification on October 4 increasing the sale price of natural gas for the CNG sector to Rs980 per one million British thermal units (MMBTU), which was even higher than the prescribed price determined by the Ogra in its decision.

The petitioners’ counsel Mohsin Shahwani said the business of the CNG sector is on the verge of shutting down due to the impact of the exorbitant 40 per cent increase in the sale price from Rs700 to Rs980 per MMBTU.

He added that the retail price for the consumer has been increased by Rs22, reaching Rs105 per kilogramme, while the price of petrol is still Rs93 a litre, and this situation can adversely affect the business of the petitioners as well as the public, who are CNG consumers.

The counsel said the impugned notification and the advice of the federal government is, on the face of it, not only beyond the legal authority of Section 8 of the Ogra Ordinance and tariff rules but also in violation of articles 4, 18 and 37 of the country’s constitution.

He added that the Economic Coordination Committee and the Petroleum Division have no authority to fix the tariff of sale of natural gas, which is the sole domain of Ogra in terms of the relevant ordinance, while Ogra cannot exceed the prescribed price determined by it through the decision on June 21.

Shahwani said that in its June 21 decision Ogra had determined the Sui Southern Gas Company’s (SSGC) approximate net operating income to be Rs166.381 billion against its estimated total revenue requirement of Rs226.122 billion, showing a shortfall of Rs59.741 billion, which was surprisingly lower than the operating income shown by the company in its own petition.

He added that time and again the superior court has held that executive orders or notifications that confer rights and are beneficial would be given retrospective effect and those that adversely affect or invade upon vested rights cannot be applied with retrospective effect.

He said that earlier, similar notifications for increasing the price of natural gas for the CNG sector had been challenged on similar grounds and they had been struck down by the superior court as ultra vires to (beyond the authority of) the Ogra Ordinance 2002.

He added that the impugned notification has been issued on the misconception that it would help the declining economy, but the CNG industry is already contributing by paying exorbitant taxes amounting to billions of rupees to the national exchequer.

The counsel said that unjust increase of the CNG price would bring the petrol and CNG prices on a par with each other, adversely affecting the business of the petitioners despite the fact that the CNG sector plays a vital role in reducing the import bill and substitutes millions of gallons of petrol, thus reducing the trade deficits and improving the balance benefits.

He said the CNG sector depends on the local natural gas and has no nexus with the international market, so natural gas cannot be brought on a par with petrol and other petroleum products.

He requested the court to declare the impugned notification increasing the CNG price as illegal and ultra vires to the Ogra Ordinance, as well as to restrain the SSGC and others from receiving bills on the basis of the impugned notification.

After the preliminary hearing of the petition, the SHC’s division bench headed by Justice Mohammad Ali Mazhar issued notices to the Petroleum Division, Ogra, the SSGC and other respondents to submit their comments on October 18.