ISLAMABAD: Consumers of CNG got a pleasant surprise on the eve of Eid: a reduction in the price of the transport fuel by as much as Rs30 per kg, thanks to judicial activism.

The relief came when Petroleum and Natural Resources Secretary Waqar Masood informed the Supreme Court on Thursday that the arrangement of linking the price of CNG with that of petrol on a weekly basis would be abandoned.

Similarly, a memorandum of understanding between the government and the CNG Association on a formula for the operating cost of CNG stations and their profits will be immediately suspended.

“Give them the Eid gift, people will be happy,” said Chief Justice Iftikhar Muhammad Chaudhry who heads a two-judge bench which had taken up a case about weekly pricing of CNG. Justice Jawwad S. Khawaja is the other member of the bench.

The hearing was adjourned to Tuesday when the court will discuss the issue of gas development surcharge (GDS) imposed on CNG at the rate of Rs9.55 and Rs17.78 per kg in the two regions, respectively.

“We are satisfied with the development,” was the immediate response of Ghyas Abdullah Paracha, chairman of the supreme council of All Pakistan CNG Association, while talking to Dawn. He appeared before the court to apprise it of a number of lacuna in the price adjustment mechanism.

The government’s assurance to do away with the CNG-petrol price link came against the backdrop of Wednesday’s court query put to bureaucrats dealing with the petroleum sector: why do you link the price of locally-produced gas with the dollar and under which law the government linked the price of CNG with those of petroleum products?

Since the government apparently had no answer, Waqar Masood submitted a three-page statement assuring the court that the Ministry of Petroleum and Natural Resources would try to ensure that interests of domestic and life-line consumers with regard to gas pricing were fully protected.

He said the linking of CNG price with that of petrol would be abandoned.

The court observed that the prices of CNG and petrol could not be linked legally.

The weekly pricing mechanism was introduced on the basis of a decision taken by the ECC on August 7.

The petroleum secretary conceded that CNG was not covered under the definition of petroleum products. He said the ECC would soon take up the matter in the light of a resolution adopted by the National Assembly expressing concern over the linking of the prices.

The secretary also said the cost of gas for the CNG sector would be adjusted only after the determination of the prescribed price by the Oil and Gas Regulatory Authority (Ogra) as per law. But with immediate effect the price would be brought to the level which was fixed for the CNG sector subsequent to the determination of price by Ogra for six months beginning July 1 this year.

Likewise, Mr Masood said, the MoU under which the government and the CNG Association had agreed on a formula for the operating cost of CNG stations would be immediately suspended. Ogra will work a new formula on the basis of information about the availability of gas, linkage with alternative fuel, discussions with all stakeholders and after scrutiny of audited accounts of CNG stations as per rules.

The court in its interim order also expressed reservation over the fixing in respect of recovery of GDS subsidisation as shown in the break-up of the consumer price of CNG provided by Ogra Chairman Saeed Ahmed Khan.

The court noted that the regulator, in exercise of its powers under Section 8 (1 and 2) of the Ogra Ordinance, was obliged to determine the estimate of total revenue requirement of each licensee for natural gas engaged in transmission, distribution and sale of natural gas to a retail consumer in accordance with rules. And on the basis of such advice the federal government will prescribe price of natural gas for each category of retail consumer for natural gas under Section 8(3) of the ordinance. Therefore, there must be a rationale for charging the difference.

Although the petroleum secretary pleaded that the surcharge being deducted had a legal sanction under Section 8(5) of the ordinance, he sought time to study the aspect pointed out by the court and reach an acceptable conclusion.

The court also noticed that on account of non-discharging of functions by Orga in accordance with the law there had been a lot of objections from one side or the other.

It adjourned the matter to Oct 30 and directed the Ogra chairman to fix the price of CNG after taking into consideration the written statement filed by the government as well as discussion made hereinabove.