ISLAMABAD: The Supreme Court declared the Compressed Natural Gas (CNG) pricing formula a violation of law and directed the Oil and Gas Regulatory Authority (Ogra) to revise the price without linking it with imported petrol by November 1. A two-judge bench comprising Chief Justice Iftikhar Muhammad Chaudhry and Justice Jawwad S Khawaja resumed the hearing of the petroleum products pricing case on Thursday.
The bench declared Rs 20.83 per kg operating cost and Rs 10.19 flat rate charged as linkage with petrol price in CNG's tariff determination illegal and directed OGRA to implement the July 1, 2012 tariff. Secretary Petroleum Waqar Masud informed the bench that "with immediate effect, the CNG price will be brought to the level that was fixed subsequent to the determination of price by Ogra for six months beginning July 1, 2012".
At the outset of the hearing, the Secretary Petroleum apprised the bench that weekly notification of petroleum prices has been suspended and a summary to this effect has been forwarded to the Economic Co-ordination Committee (ECC). He also informed the bench that the agreement between the government and CNG association over the Rs 20.83 per kg operating cost had been suspended and petrol and CNG prices had been de-linked. During the course of the hearing, the bench ruled profit rate and operating costs on CNG illegal and termed it exploitation of consumers' rights.
Submitting a report pertaining to details of petrol and CNG pricing formula in pursuance of court orders, Ogra's Chairman Saeed Ahmed Khan said that CNG station owners were earning a profit of Rs 11.19 per kg and Rs 20.83 per kg operating cost. He also said that the government's procurement cost of CNG in Region 1 was Rs 19 per kg whereas per kg price of CNG in Region 2 was Rs 17.57 and declared that the tariff included development charges.
The Supreme Court Chief Justice observed that CNG price included development charges but no development work was being done in the vicinity of Sui in Balochistan maintaining that the situation would have been different if development had been undertaken. Chief Justice Iftikhar Muhammad Chaudhary observed that price of gas cannot be linked to petroleum price. He said that under the law, profit could not be beyond a limit.
He further observed that CNG was one of the most profitable businesses in the country and urged the government to take measures to look into the rumour that a bribe of Rs 9 million was given to issue a license for a CNG station. The court directed the Chairman of Ogra to fix the price of CNG in the light of the statement by the Secretary Petroleum and submit a report on or before November 1 and adjourned the hearing.