LAHORE: The Lahore High Court (LHC) has dismissed a challenge of the industries against recovery of the arrears of the Estimated Revenue Requirement (ERR) on gas tariff determined by the Oil and Gas Regulatory Authority (Ogra) for 2014-15.

Suraj Textile Mills and other industries from Faisalabad region in particular had assailed a notification issued by Ogra on Aug 31, 2015. The impugned notification determined the prescribed price of gas for various categories of consumers on the ground that the advice for ERR of Sui Northern Gas Pipelines Ltd (SNGPL) for 2014-15 was filed in Dec 13, 2013 before Ogra.

A decision was rendered on July 3, 2014 wherein provisional tariff prescribed by Ogra for 2014-15 with effect from July 1, 2014 was Rs464.94 mmBtu for general industry.

Ogra sent this provisional price to the federal government for its advice. The government was required to render its advice within 40 days, however it failed to do so within the given time.

Instead the advice was sent after a delay of 14 months after that the impugned notification was issued and the sale price was notified at the rate of Rs600 mmBtu.

The petitioners’ counsel contended that section 8(3) of Ogra’s Ordinance clearly defines what is to happen in the event that the federal government fails to advise the authority within the prescribed time. In such eventuality, it is the authority which has to notify the sale price, as determined by it in the official gazette.

The petitioners plead that if the government fails to advise Ogra then the latter should notify the price which is the relevant price due from the consumer for the disputed period. The industries say they are liable to pay at the rate prescribed in the decision on July 3, 2014 being Rs464.94 mmBtu.

The counsel said the petitioners have been made liable to pay arrears on account of the differential of Rs464.94 and Rs600 mmBtu. Advocates Khalilur Rehman, Anisur Rehman and Malik Bashir Ahmad Khalid represented the industries.

Opposing the petitions on behalf of the SNGPL, Advocate Anwaar Hussain had argued that there was no fault on part of the company as admittedly the ERR was filed in time and they had no control over the Ogra as well as the federal government. He further argued that even otherwise time limits provided in section 8(2) of the ordinance as well as rule 18(2) were directory in nature as no penal consequences had been provided in the ordinance. He also relied upon a judgment of Sindh High Court rendered in year 2020 on the same issue.

On behalf of Ogra, Advocate Samia Khalid argued that the petitioners were misconceiving the law as there was no failure on part of the regulator. She said Ogra decided the ERR and prescribed a flat Rs464 mmBtu for all consumers and it was the federal government which after taking into account its socioeconomic agenda fixes the final sale price. She said no wrong had been done to the petitioners as the impugned notification was applicable prospectively.

In a judgement announced on Friday, Justice Ayesha A. Malik observes that the petitioners/industries want to pay at the rate of Rs464.94 mmBtu as opposed to the notified rate of Rs600 mmBtu. In this regard, the petitioners have been unable to explain why they should be required to pay at the rate of Rs464.94 mmBtu when they were paying at the rate of Rs488.23 mmBtu as notified on Jan 1, 2013.

Furthermore, the judge notes, the final tariff for the year 2014-15 was Rs528.19 mmBtu as determined by Ogra. Therefore, there is no logic in seeking to pay Rs464.94 mmBtu, she adds.

Justice Malik also remarks that the federal government and Ogra should have been compliant with the law to ensure that the tariff is determined and notified in a timely manner for the benefit of all concerned.

However, she observes that since the determination of the prescribed price and notification of the sale price is an on-going matter and setting aside the sale price of Rs600 mmBtu would in fact give the industries a benefit they were otherwise not entitled to.

Earlier the judge had issued an interim relief to the petitioners and the SNGPL was restrained from recovering the amount for the disputed period.

Published in Dawn, March 6th, 2021

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