ISLAMABAD: A decision of the outgoing cabinet to pass on the burden of Rs5.5 billion gas theft and losses caused by security situation to consumers is reported to have been withheld because of legal complications.
A senior official of the ministry of petroleum told Dawn on Wednesday the March 7 cabinet decision contained contradictory elements which might need to be settled through litigation since the matter could not be referred back to the cabinet which stood dissolved.
Referring to minutes of the meeting circulated by the cabinet division, the official said the cabinet decided to take over half of the Rs11 billion gas theft and losses in the area caused by law and order situation and pass them on to consumers.
But in a subsequent paragraph, the minutes also reported that the cabinet also decided that existing laws did not allow the government to issue directives to the Oil and Gas Regulatory Authority (Ogra) to take such a step. This has created a peculiar situation because under the Ogra law the federal government or the cabinet can approve policy parameters for calculation of gas tariff based on a pre-defined formula and it was Ogra’s jurisdiction to determine prudence of various heads under the parameters approved by the federal government.
“There is no provision in the law for the government or the cabinet to issue a policy directive to the regulator to consider certain amount as pass-through item on an interim basis,” said the official.
He said once the cabinet division formally issued policy directive on the basis of the cabinet decision the matter would need to be referred to the ministry of law for legal opinion either by the ministry of petroleum or by Ogra. He said that since Ogra had been resisting the cabinet decision for passing on to consumers the impact the matter could be taken to a court of law given the fact that the Lahore High Court had earlier upheld its determinations for reducing benchmarks for gas system losses and improving efficiency.
On March 7, former information minister Qamar Zaman Kaira had told journalists that the federal cabinet headed by Raja Pervez Ashraf had decided to increase natural gas tariff by about Rs5.50 per unit to pass on the 50 per cent of the amount of unaccounted gas for gas theft and losses in security affected areas to consumers that had been a cause of dispute between Ogra and gas companies.
He said the decision had been taken on the input provided by a four-member cabinet committee headed by the then law minister Farooq H. Naek.