SC whiplashes OGRA over weekly fuel pricing

A two-member bench of the Supreme Court on Wednesday issued notices to the managing directors (MDs) of the Sui Northern Gas Pipeline Limited (SNGPL) and Sui Southern Gas Company Limited (SSGCL), as well as sought a report from Oil and Gas Regulatory Authority Chairman Saeed Ahmed Khan on the formula devised for weekly petrol and gas price monitoring.
The bench, which heard the oil pricing case comprised Chief Justice Iftikhar Muhammad Chaudhry and Justice Jawwad S Khawaja.
The bench also questioned the rationale of the formula under which OGRA linked the price of domestic Compressed Natural Gas (CNG) with imported petrol on a weekly basis.
During the hearing, Chief Justice Chaudhry observed that the linkage of the price of imported petrol with dollar was understandable, however, CNG was a domestic product and how could it be linked with the price of imported petroleum.
Petroleum Secretary Waqar Masood informed the court that there was also a component of Gas Development Infrastructure Cess in the gas tariff, while the price of petrol was determined by the bill of lading and failing that was determined by the international price directory.
PSO managing director informed the court that the demand for petrol was six million tonnes per year, of which one million tonnes were imported from Kuwait. The government paid PSO Rs 1.76 per litre as service charge for diesel imports, adding that PSO was attempting to forge long-term relations with an oil producer directly, he said.
The OGRA chairman informed the court that tariff was determined by OGRA subsequent to submission of a tariff petition by SNGPL and SSGCL twice a year (July and January).
The chief justice observed that in that case, tariff for the consumers should also be determined biannually instead of on weekly basis.
The chief justice observed that OGRA was a regulatory body and it should not be influenced by either the government or the court in the discharge of its function. He further observed that there must be a mechanism under which OGRA implemented its policies as a regulator and should ensure the interests of the consumers.
The chief justice queried which factor had increased the cost of the operation that necessitated an increase in the CNG price, and directed the OGRA chairman to submit the tariff chart from August 15 to date within two hours, explaining the factors that led to an increase in the price of CNG and petroleum.

The OGRA chairman returned with the details of the tariff chart, saying petroleum prices were not completely deregulated and OGRA merely determined the price of kerosene.
He added that the per barrel cost of crude was $118.2 on August 15 or Rs 77.9 per litre. He informed the court that more than 90 percent of the oil imports were undertaken by PSO, while OGRA acted as a monitor of petrol price.
The OGRA chairman also informed the court that gas price for consumers could be determined biannually, upon which the chief justice queried how the authority would compensate the consumers for the weekly raise in tariff paid so far.
The OGRA chairman confessed that they were facing a lot of problems due to the revision of petroleum prices on a weekly basis, to which the chief justice said, “If you are in trouble, refuse issuing notifications on a weekly basis.
Tell the government that price would be revised only twice during a year,” he added.
The CJ said stern action would be taken if rights of the consumers were not safeguarded.
The hearing was later adjourned for Thursday (today).