SHC sends notices to ministry of petroleum, Ogra on plea for reduction in CNG price

The Sindh High Court has issued notices to the ministry of petroleum, the Oil and Gas Regulatory Authority (Ogra), the Sui Southern Gas Company (SSGU) and others on the petition filed by the Petroleum and CNG Dealers Association, seeking a reduction in gas prices for the CNG sector.

The petitioners told the SHC that the federal government was under a legal duty to revise and reduce the natural gas tariff following the international crude oil price crash by more than 65 per cent, resulting in cheaper imported petroleum products.

They accused the ministry of petroleum of inaction, saying that the SSGC was selling the locally produced natural gas on an unreasonably higher rate as compared to the price of the imported petrol and diesel.

They said the prices in Pakistan were not reduced despite the international crude oil prices crash which was the major factor in determining the cost of gas as per the respondent’s own record showed in their estimated revenue requirement petition as well as the decision/determination of Ogra on May 17, 2019.

They submitted that the decline in petroleum products’ prices caused an alarming situation for the CNG sector, forcing them into a complete shutdown since no consumers preferred expensive CNG over cheaper petrol and diesel. Consequently, they added, it caused enormous financial losses to the petitioners, resulted in a large-scale unemployment, and increased the import bill of oil, putting pressure on rupee with a raised demand of US dollar and depriving the people of cleaner fuel.

Petitioner counsel Mohsin Shahwani said his clients had sought the directions for Ogra and the ministry of petroleum to initiate proceedings for review of the revenue requirements of the SSGC in view of the unprecedented fall in the price of the crude oil in the international market while reviewing the tariff of gas for the CNG sector.

The counsel pointed out that the representation of the SSGC to Ogra for determining the CNG tariff in which they had taken the plea that the cost of gas purchased was based on the projected wellhead gas prices effective July 2019 worked out on estimated average the cost and freight (C&F) price for crude oil at $61 per barrel and the HSFO at $ 351.30 per metric ton.

He submitted that now the price of crude oil was about 20 to 25 dollars per barrel and to make it commensurate with the crude oil price, some direction may be issued to Ogra and the SSGC to reduce the CNG price and Ogra may be directed to initiate the review proceedings.

He referred to Rule 4 (1) of the Natural Gas Tariff Rules 2002 which provides that any consumer or person interested in the tariff may file a petition with the authority by filing it with the registrar. He said that in the same rule it was further provided that authority may also initiate proceedings suo moto.

The SHC’s division bench, headed by Justice Mohammad Ali Mazhar, observed that the point raised in the petition required consideration and issued notices to ministry of petroleum, Ogra and the SSGC and called their comments on May 21.