PESHAWAR: A Peshawar High Court bench has temporarily stopped the petroleum and natural resources ministry from notifying the increase in the natural gas tariff by the Oil and Gas Regulatory Authority in Oct this year for industrial consumers of the Sui Northern Gas Pipelines Limited.

Justice Waqar Ahmad Seth and Justice Ikramullah Khan issued the stay order while hearing a joint petition of five textile mills of Khyber Pakhtunkhwa, including Sarhad Textile Mills, against the Orga’s recommendation to enhance the natural gas tariff by almost 69 per cent for industrial consumers.

The bench issued notices to the respondents, including federal government, Ogra and SNGPL, for explanation on the matter and fixed Jan 24 for the next hearing.

It directed the respondents to ensure status quo on the matter until next hearing.

The petitioners have requested the court to declare as illegal and without lawful authority the impugned decision/ determination of tariff by Ogra on Oct 6, 2016, together with any subsequent notification, proceedings emanating or arising therefrom.

Asks centre, Ogra, SNGPL to explain position on matter

They also requested the court to restrain the petroleum and natural resources ministry from notifying such illegal ERR (estimated revenue requirement) determination by Ogra and also to restrain SNGPL from recovering anything in excess of prevailing prices that the petitioners had been paying.

Shumail Ahmad Butt, lawyer for the petitioners, said under the law, the SNGPL and its regional offices were bound to charge all its consumers including petitioners a tariff duly determined by Ogra and notified by the federal government in terms of Section 8 of the Ogra Ordinance.

He said previously, the SNGPL charged all consumers including petitioners a gas tariff notified on Jan 1, 2013 and that the said notification was followed by another notification issued on Aug 31, 2015.

The lawyer said afterwards, the SNGPL filed a petition with Ogra for the determination of estimated revenue requirement (DERR) for financial year 2016-17.

He said in accordance with the provisions of the Rule 7(1) of the Natural Gas Tariff Rules, 2002, interested and affected persons, including gas consumers and general public, were invited to furnish comments and suggestions to the Orga registrar.

The lawyer said the All Pakistan Textile Mills Association, a national trade association of the textile industry, filed an ‘intervention request’ raising serious legal and factual disputes.

He said the petition for determination of the ERR filed by the SNGPL was just a bunch of numerical numbers without providing adequate background and justifications for the estimated revenue requirements.

The lawyer said the petition neither provided any information with regards to SNGPL’s last year performance with regards to the Ogra determined targets nor performance targets for the petition for financial year 2016-17.

He added that total focus of the petition was on mega spending and the plans to recover it from the customers without offering any commitment for uninterrupted supply of gas to existing as well as new customers, cost effective operations and improved customer service.

The lawyer said the proposed operating cost of Rs35 billion in 2016-17 compared to Rs22 billion determined for financial year 2015-16 showed an increase of almost 600 per cent, which sounded grossly overstated and required a careful review by Ogra.

He said the Ogra while ignoring the observations made on such petition through different interventions allowed the petition and proposed to raise the industrial tariff almost 69 per cent without any justification on Oct 6, 2016.

The lawyer said such huge raise in tariff would definitely destroy the textile industry and the textile manufacturers would not be able to compete with international market.

He said the government was likely to notify these exorbitant prices and thus creating an utterly unsustainable and highly uncompetitive working environment for his clients.

Published in Dawn, December 24th, 2016