ISLAMABAD: Hinting at the revival of operation cost as legitimate expense on CNG suspended by the government last week, the Oil and Gas Regulatory Authority (Ogra) announced on Tuesday that the reduced prices for the fuel would remain effective till adjudication of the case by the Supreme Court.
Speaking at the conclusion of a public hearing on CNG prices, Ogra chairman Saeed Ahmad Khan said the regulator had provided a fair opportunity to all stakeholders, including CNG owners and consumers, to present their viewpoints in line with last week’s SC directive to work out a new pricing mechanism.
He said an internal meeting of Ogra had been convened on Wednesday to consider all aspects presented by the stakeholders to finalise a new CNG pricing formula which would be submitted to the apex court on Thursday.
In reply to a question, Mr Khan said the existing CNG price would be in place till Wednesday. The price would be re-determined unless otherwise decided by the Supreme Court.
He said the question about operating expenses for CNG pricing was a genuine issue which fell under the definition of production cost as highlighted by the participants during the public hearing and would be given due consideration while determining the new CNG pricing formula for presentation to the apex court.
Asked when the prices of petroleum products would be revised after the suspension of weekly pricing on the directives of the apex court, the Ogra chief said it was yet to be examined if the revision should take place on Nov 1 or later in consultation with the government.
During the hearing, representatives of CNG station owners accused the government of misinterpreting the court’s order which sought to provide relief to consumers. It was a well-planned “conspiracy to pitch the public against the judiciary” by suspending a legally and mutually agreed memorandum of understanding on the operation cost.
They said they would counter the conspiracy by selling CNG at the reduced prices despite losses, but warned that they would seek compensation for that by presenting facts and legal documents before the court on Thursday, even though the interim rates were unviable.
A representative of transporters accused Ogra and CNG station owners of conspiring against the public. He said the transporters had voluntarily reduced fares by 25 per cent on Tuesday after a reduction in CNG prices.
Malik Khudadad, a representative of the CNG Association, said the 2009 MoU was signed by a committee comprising federal secretaries and Ogra officials appointed by the prime minister. It was a legal document because it was later announced by the prime minister himself, he said, adding that if the document was illegal its signatories should also be penalised instead of targeting the CNG industry.
The MoU worked out the operational cost of converting raw natural gas into CNG and the expenses should be verified by an independent auditor, he said.
Abdul Sami Khan, a CNG association leader from Karachi, said the government had violated the court’s order which sought to reduce the sale price of gas to CNG stations to the level of Rs618.55 per mmbtu as existed on July 1 and work out a new formula. But the government suspended the MoU which had not been taken up by the court, he said.
Mansoor Ahmad, a lawyer representing the CNG owners, said the de-notification of the MoU was not only violation of section 9 of the Ogra Ordinance but also in contravention of articles 4, 9, 10-A and 18 of the Constitution.
He said section 43 of the Ogra Ordinance introduced in 2009 ceased to hold ground after the passage of 18th Amendment and, therefore, CNG was no more a regulated business because the section had fixed 20 per cent operating profit for CNG business.
OGRA UNDER FIRE: Mr Ahmad argued that Ogra had now lost legal standing to hold the hearing for consumer prices, except for fixing the sale price for CNG stations. He accused the regulator of having been involved in illegally fixing weekly CNG pricing without any legal cover by acting as a subordinate to the petroleum ministry against the public interest instead of acting as an independent regulator.
Ghias Abdullah Paracha, chairman of the Supreme Council of All Pakistan CNG Association, said the government and Ogra had not explained to the court that the conversion of raw gas into per kg of CNG involved over Rs25 of operational expense to make it a value-added product. He said the court order did not ask the government to de-notify the operational cost. He said that despite approval of a 20 per cent profit, the CNG industry was allowed only 11 per cent profit even before the court’s order.
Mr Paracha said the government’s decision to suspend the operational cost meant that CNG stations should sell raw gas to consumers, but this would eventually lead to closure of the CNG business. “Through a well-planned conspiracy, the government has made an attempt to pitch CNG users and owners against the Supreme Court which will be foiled by the CNG industry.”
He said the court would be requested to look into the issue and undo an injustice caused by the government. The industry would also seek compensation for the losses incurred because of the sale of CNG at reduced prices. He said the reduction in prices should have been made through restoration of cost of gas sale to CNG stations approved by Ogra through a legal hearing process on July 1, withdrawal of illegal gas infrastructure development surcharge beyond a limit approved by parliament, reduction in taxes and de-linking the price of CNG from that of petrol.