IN THE HIGH COURT OF SINDH AT KARACHI
BEFORE:
Mr. Justice Mohammad Shafi Siddiqui
Total 162 Suits bearing Nos.1978, 1997, 1999, 2012, 2023, 2028, 2029, 2032, 2052, 2056, 2069, 2071, 2072, 2083, 2084, 2085, 2094, 2095, 2107, 2119, 2120, 2121, 2122, 2137, 2139, 2144, 2145, 2147-2152, 2158-2162, 2165-2168, 2170, 2175, 2176, 2177, 2184, 2185, 2186, 2187, 2188, 2189, 2190, 2191, 2192, 2193, 2194, 2195, 2196, 2197, 2198, 2199, 2206, 2210, 2212, 2213, 2214, 2215, 2217, 2219, 2220, 2231, 2234, 2236, 2237, 2238, 2239, 2240, 2245, 2246, 2247, 2248, 2249, 2251, 2256, 2257, 2258, 2263, 2266, 2267, 2268, 2271, 2274, 2277, 2279, 2280, 2281, 2283, 2284, 2293, 2294, 2320, 2322, 2342, 2347, 2350, 2358, 2376, 2380, 2403, 2410, 2412, 2441, 2451, 2467, 2468, 2471, 2478, 2479, 2480, 2493, 2505, 2507, 2511, 2513, 2515, 2517, 2528, 2530, 2553, 2599, 2641 of 2015, 343 and 4, 66, 77, 84, 85, 101, 103, 115, 119, 121, 125, 126, 127, 144, 154, 155, 209, 211, 246, 256, 283, 309, 320, 321, 336, 370, 388, 391, 415, 429, 432, 433, 441, 475, 483, 491, 518, 563, 637, 678, 775, 859 and 991 of 2016
Pakistan Beverage (Pvt.) Ltd. in leading suit
and others in connected suits
versus
Federation of Pakistan & others in all suits
Dates of Hearing: 10.03.2016, 18.03.2016, 25.04.2016 and 06.05.2016
Plaintiffs in the suits: Through Mr. Mr. Makhdoom Ali Khan, Mr. Hussain Ali Almany along with Hyder Ali Khan, Jam Zeeshan Ali and Mr. Sami-ur-Rehman Advocate, M/s. Abrar Hassan and Masroor Alvi Advocates, Ms. Soofia Saeed Advocate, Mrs. Naveen Merchan and Mr. Salim Ghulam Hussain Advocates, Mr. K.A. Wahab along with Mr. Hakim Ali Khan Advocate, Mr. Faiz Durrani and Mrs. Samia Durrani along with Mr. Manzoor-ul-Haq Advocate, Mr. Amin M. Bandukda Advocate, Mr. Mazhar Lari Advocate, Mr. Khalid Mehmood Siddiqui Advocate, Mr. Muhammad Anas Makhdoom Advocate Mr. Amel Khan Kasi a/w Ms. Sehar Rana Advocate, Mr. Mehmood Abbas Advocate, Mr. Faheem Shah Advocate, Mr. Muhammad Mustafa Hussain Advocate, Mr. Shahzad Raheem Advocate, Mr. Qazi Ajmal Kamal Advocate, Mr. Darvesh K. Mandan Advocate, Mr. M. Ehsan Advocate, Mr. Junaid M. Siddiqui Advocate, Mr. Junaid Mukhtar Advocate, M/s Naeem Suleman & Arshad Shehzad Advocates, Mr. Rao Liaquat holds brief for Mr. Mirza Qasim Baig Advocate, Mr. Muhammad Hanif Khatana Advocate, Mr. Abdul Sattar Gujjail Advocate, Mr. Nasir Mehmood Advocate, Mr. Salman Asghar Shaikh Advocate, Mr. Hamza Hidayatullah holds brief for Mr. Ravi Pinjani Advocate, Mr. Arif Shaikh Advocate, Mr. S. Zeeshan Advocate, Mr. Adil Abbasi Advocate, Mr. Muhammad Iqbal Bhatti Advocate, Mr. Moinuddin Agha Advocate, Mr. S. Mohsin Ali Advocate, Ms. Lubna Pervez Advocate,
Defendant Federation of Pakistan: Through Mr. Salman Talibuddin, Addl. Attorney General, along with Ms. Maria Ahmed Advocate and Mr. Abdul Qadir Leghari, standing counsel.
Defendant Sui Southern Gas Company Ltd: Through Mr. Asim Iqbal and Farmanullah Advocates.
1) Whether the impugned notification dated 31.08.2015 is issued in accordance with law?
2) What should the decree be?
2. Some counsels on behalf of the plaintiffs have argued and have taken me to the relevant provisions of law. The substantial arguments in this regard were raised by Mr. Makhdoom Ali Khan, Mr. Faiz H. Durrani, Mr. Amel Khan Kasi, Mr. Ali Almani Advocate, Mr. Amin Bandukda while with slight variation and addition they were adopted by rest of the counsels. On behalf of defendants Mr. Salman Talibuddin, Addl. Attorney General provided assistance for OGRA and Federation of Pakistan and Mr. Asim Iqbal for SSGC and refuted the contentions raised by counsels for the plaintiffs.
3. Since bunch of suits revolves around the OGRA Ordinance 2002 and Tariff Rules 2002 it would not require detailed analysis of the facts except that it is to be seen whether the impugned notification dated 31.08.2015 passes through the test prescribed under section 8 of the OGRA Ordinance and the rules framed thereunder and referred above.
4. Plaintiffs’ case in nutshell is that the pricing scheme detailed in section 8 has been frustrated through impugned notification inasmuch as the federal government never recommended/advised OGRA for issuance of such price notification and that the prescribed price determined by OGRA was never notified and whatever was notified by OGRA was after a year from the date of default committed by the federal government and 17 months from the date of determination of the OGRA, hence the impugned notification has not only frustrated the scheme but is also invalid in the sense that such lower price as determined and prescribed by OGRA, could not have been notified as in the given circumstances only a higher price, had it been determined by OGRA could have been notified.
5. Since it involves the application of section 8 of OGRA Ordinance and certain definitions available in the Ordinance and the Rules, I would like to reproduce them as it appears:-
“Section 2. Definitions.‑
(ix) "financial year' means the period beginning on the first day of July in a calendar year and ending on the thirtieth day of June in the next following calendar year;
Section 7. Tariff.‑(1) Subject to policy guidelines, the Authority shall determine or approve tariff for regulated activities whose licences provide for such determination or such approval or where authorized by this Ordinance.
(2) Tie criteria for determination, approval, modification and revision of tariffs shall be prescribed in the rules and in the terms and conditions of each licence and shall, inter alia include ‑‑‑
(a) provision for the protection of users of regulated activities and consumers against monopolistic or oligopolistic pricing;
(b) cost of research, development and capital investment programme;
(c) provision of reasonable returns to attract investment of the quantitative and qualitative improvements of regulated activities;,
(d) encouragement and reward of efficiency;
(e) sending of appropriate price signals regarding the relative abundance or scarcity of supply of such regulated activity;
(f) minimizing economic distortions; and
(g) keeping in view the costs of alternate or substitute sources of energy.
8. Pricing for retail consumers for natural gas.‑(1) The Authority shall determine an estimate of the total revenue requirement of each licensee for natural gas engaged in transmission, distribution and the sale of natural gas to a retail consumer for natural gas. in accordance with the rules, and on that basis advise the Federal Government the prescribed price of natural gas for each category of retail consumer for natural gas.
(2) A licensee for natural gas referred to in sub‑section (1), shall submit for review by the Authority its total revenue requirement after incorporating the actual changes in the well‑head prices, as notified by the Authority and other relevant factors and the Authority shall advise the Federal Government promptly of the revised prescribed prices for the licensee for natural gas.
(3) The Federal Government shall, within forty days of the advice referred to in sub‑sections (1) and (2), advise the Authority of the minimum charges and the sale price for each category of retail consumer for natural gas for notification in the official Gazette by the Authority of the prescribed price as determined in sub‑sections (1) and (2), the minimum charges and the sale prices for each category of retail consumers for natural gas.
(4) If the Federal Government fails to advise the Authority within the time specified in sub‑section (3) and the prescribed price for any category of retail consumer for natural gas determined under sub‑sections (1) and (2) is higher than the most recently notified sale price for that category of retail consumers for natural gas, the Authority shall notify in the official Gazette the prescribed price as determined by the Authority under subsections (1) and (2) to be the sale price for the said category of retail consumers for natural gas.
(5) Each licensee for natural gas shall pay to the Federal Government the development surcharge in respect of each unit of natural gas sold during the calendar month within two months of the close of that month and any amount paid by a licensee under this sub‑section shall be an expenditure for which allowance shall be made in computing profits or gains under section 23 of the Income Tax Ordinance, 1979 (XXXI of 1979):
Provided that when the Income Tax Ordinance, 2001 (XLIX of 2001), comes into force the provisions of the said Ordinance shall apply for the purposes of this sub‑section.
(6) In this section ‑
(a) "category of retail consumers for natural gas" means a category of retail consumers for natural gas designated as such by the order of the Federal Government;
(b) "development surcharge" means the amount payable by each licensee for natural gas and calculated in accordance with the rules and which represents, in respect of each category of retail consumer for natural gas to which it is applicable, the amount, if any, by which the sale price exceeds the prescribed price;
(c) "licence for natural gas" means a licence for transmission, distribution or sale of natural gas to a retail consumer for natural gas granted pursuant to sub‑section (1) of section 23;
(d) "licensee for natural gas" means a holder of a licence for natural gas:
(e) "minimum charges" means the amount a licensee for natural gas may charge a retail consumer for natural gas as notified, from time to time, under this section;
(f) "prescribed price" means the amount determined under this section, which represents the amount a licensee for natural gas would be entitled to receive from each category of its retail consumers for natural gas in order to achieve its total revenue requirement;
(g) "sale price"‑means the price notified under this section at which a licensee for natural gas is authorised under this Ordinance and licence to sell natural gas to that category of retail consumer for natural gas;
(h) "total revenue requirement" means for each financial year, that total amount of revenue determined by the Authority for each licensee for natural gas so as to ensure it achieves the rate of return provided in its licence for natural gas.
National Gas Tariff Rule 2002
“Rule 5. Admission of petition.-------(1) As soon as may be, .but not later than fourteen days of the date of filing of the petition, it shall be placed before the Authority for admission.
(2) The Authority may call for submission by the petitioner of any further supporting communication for the purposes of evaluation of the petition for admission, within such time as it specifies. The Authority shall not be required to entertain or admit any petition until such supporting communication is furnished.
(3) The Authority may, if a prima facie case for evaluation exists, admit the petition for consideration without requiring attendance of the petitioner. The Authority shall not pass an Order refusing admission without giving the petitioner an opportunity of being heard or making a written representation.
(4) In case the Authority admits the petition, it may give such Orders and directions for the service of notices as it deems appropriate to--
(a) all persons affected by or interested in the petition, who in the opinion of the Authority are likely to be affected or interested ; and
(b) persons who, by reason of their calling or expertise, may be of assistance to the Authority in arriving at a just and informed determination of the proceedings.
(5) The Authority may, if it deems appropriate, direct the advertisement by publication of the title and brief description of the petition in any one or more newspapers specified for the purpose by the Authority. Such publication shall also contain a notice of the availability of a copy of the petition at the office of the Authority upon payment of the fee determined for the purpose by the Authority.
(6) In any publication Ordered by the Authority under sub-rule (5), if the petition ' is by a licensee. the publication shall, in addition to the information directed to be published by the Authority, contain the following information, namely:--
(a) Total rupee amount of the rate change;
(b) typical bill impact of the proposed tariff on each category of consumers;
(c) the telephone number of a representative of the licensee who can be called for further information; and
(d) if applicable, a statement indicating that the Authority has ordered immediate application of the whole or part of the tariff proposed by the licensee.
(7) The Authority may, while admitting a petition, allow the immediate application of the whole or a part of the tariff proposed by the petitioner, while the proceedings are pending before the Authority, subject to an order for refund for the protection of consumers or an order of satisfactory security to be provided for such refund.
Rule 15. Decisions of the Authority.-(1) All Orders, determinations and decisions of the Authority shall be taken in writing and shall identify the determination of the Chairman and each member.
(2) The Authority shall decide a petition, tiled pursuant to sub-rules (1) and (2) of rule 4, within five-and one half months, of the date of tiling of the petition:
Provided that the Authority may, only for causes beyond its control extend the aforesaid five and one half months period by a further period of one month:
Provided further that the Authority shall .not extend the time for its final determination in such proceedings beyond an aggregate period of six months. The reasons for such extension in time shall be recorded in writing.
(3) The Authority shall decide a petition, filed pursuant to sub-rule (3) of rule 4, within three months of the date of tiling of the petition:
Provided that the Authority may, only for causes beyond its control extend the aforesaid three months period by a further period of fifteen days:
Provided further that the Authority shall not extend the time for ''its final determination in such proceedings beyond an aggregate period of three months. The reasons for such extension in time shall be recorded in writing.
(4) Copies of all orders, determinations and-decisions made or issued by the Authority, shall -be certified under the signature of the Registrar and the seal of the Authority and shall be made available to any person on payment of such fees as the Authority may determine from time to time. Copies of all such orders, determinations and decisions shall be available at the principal office of the Authority for public inspection free of cost.”
Rule 17. Evaluation criteria.-----(1) All petitions tiled under these rules shall be evaluated by the Authority on the basis of and in accordance with the following criteria, namely --
(a) In order to minimize economic distortions, tariffs should reflect the average cost of service of each licensee, except where otherwise provided under the policy guidelines of the Federal Government; Sam
(b) tariffs should clearly identity any inter-class or inter-region subsidies resulting from the policy guidelines of the Federal Government and should be set in a manner so as to provide such subsidies transparently,
(c) tariffs should include a mechanism to allow licensees a benefit from and penalties for failure to achieve benchmarks set by the Authority through yardstick regulation for, inter alia and without limiting the generality of such regulation, capacity utilization, operation and maintenance costs and unaccounted for natural gas:
(d) tariffs should be determined in a manner which promote continued reasonable investment in equipment, facilities and research and development for qualitative and quantitative improvement in the provision of regulated activities;
(e) tariffs should be determined in a manner that takes into account the covenants contained in agreements, relating to regulated activities, with international institutional lenders:
(f) tariffs should be determined on the basis of a return on assets, however, the Authority may after consultation with licensees and the Federal Government, determine tariffs on the basis of other regimes, including without limitation, return on equity, and tariffs may be determined on the basis of disparate regimes for different types of licensees;
(g) tariffs should be determined in a manner that protects consumers against monopolistic and oligopolistic pricing;
(h) tariffs should generally be determined taking into account a rate of return as provided in the licence, prudent operation and maintenance costs., depreciation, government. levies and, if applicable, financial charges and cost of natural gas;
(i) while determining the value of a licensee's fixed assets in operation, the value of assets funded wholly or partially, on a nonrefundable basis by a person other than the licensee, should be excluded to the extent of such contribution;
(j) only such capital expenditure should be included in the rate base as is prudent, cost effective and economically efficient;
(k) depreciation of a licensee's assets should be allowed on the basis of their useful life as may be determined, ' from time to time by the Authority;
(l) tariffs should be comprehensible and should explicitly state each component thereof;
(m) tariff should be set to facilitate the sending of appropriate price signals regarding the relative abundance or scarcity of supply of the relevant regulated activity: and
(n) tariffs should keep in view the cost of substitute or alternate sources of energy.
(2) In evaluating a petition; the Authority shall strike a balance, to the extent possible, among the criteria, specified in sub-rule (1), in order to optimize the benefits to all persons likely to be affected by the Authority's determination on the petition.
Rule 18. Pricing for retail consumers for natural gas.------(1) As soon as maybe but not later than three days of each determination by the Authority of the total revenue requirement of a licensee, the Authority shall advise the Federal Government the price which should apply to each category of retail consumers for natural gas of that licensee.
(2) The Federal Government shall consider the Authority's determination referred to in sub-rule (1) and as soon as may be but not later than forty days of receiving the same. advise the Authority of the minimum charges and the sale price for each category of retail consumers for natural gas which shall apply in relation to that licensee.
(3) The Authority shall, as soon as may be but no later than three days of receiving the advice from the Federal Government, notify, in the official Gazette, the price applicable to a licensee and the minimum charges and maximum sale prices which that licensee shall be permitted to charge each category of its retail consumers for natural gas.
(4) If the Federal Government fails to advise the Authority within time specified in sub-rule (2) and the price for any category of retail consumers for natural gas determined by the Authority under sub-rule (1) is higher than the most recently notified sale price for each category of retail consumers' for natural gas, the Authority shall notify, in the official Gazette, the price as determined by the Authority under sub-rule (1) to be the sale price for said category of retail consumers for natural gas.
(5) No licensee shall charge any consumer, for the supply of natural gas, any sale price or minimum charge other than the sale price or minimum charge notified by the Authority pursuant to these rules and publicized by the licensee in the print and electronic media.
(6) Licensees shall be entitled to charge each retail consumer for natural gas the applicable minimum charges notified by the Authority pursuant to these rules notwithstanding that no gas has been taken by such retail consumer during the period for which such minimum charges are levied.”
6. The decision of the issue based on the analysis and interpretation of the above relevant sections and the rules of OGRA Ordinance and Tariff Rules 2002.
7. I have heard the learned counsels appearing for the plaintiffs as well as for defendants and perused the material available on record and the law referred.
8. The plaintiffs have challenged the legality of notification issued by OGRA dated 31.08.2015 in terms whereof the gas tariff was increased to an amount not even prescribed by OGRA in their determination. This notification under the law is required to be issued on the basis of prescribed determination made by OGRA on 03.07.2014 for the financial year 2014-2015. Under the Scheme, the gas tariff of the relevant year is based on the prescribed determination of that year which is to be re-advised by the federal government under section 8(3) of OGRA Ordinance 2002 to be notified by OGRA within 40 days of such prescribed determination and that it should reflect the determination made by OGRA. There is no cavil to this proposition that OGRA is an authority under Ordinance, 2002 to determine the gas tariff and the matters relating thereto. The procedure and the mechanism involved under the hierarchy is such that all those licensees such as SSGC files their respective petitions for the determination of estimated revenue requirements. These marketing and distributing companies provide their revenue requirements to OGRA through their petition and after analyzing the same proceed to determine the prescribed price for the gas. The procedure summarily is as under:-
a) Licensees are required to file their respective petitions before OGRA in December each year for determining their estimated revenue requirements either for one or more than a year in terms of Rule 4(2) referred above; it is named as ERR petition;
b) As mentioned above the fiscal year for determination starts from 1st. July and ends on 30th June of the following year in terms of Section 2(ix) of the Ordinance 2002;
c) In pursuance of such petition in terms of Rule 5 a public notice is required to be issued to all affected and interested persons who may have any interest and objection in relation thereto and they are required to prescribe a date of hearing in relation thereto in terms of Rule 10 ibid;
d) OGRA then determines the licensee’s estimated revenue requirements in terms of Rule 15(2) of Rules 2002 which is prescribed price for each consumer;
e) Within a span of three days of determination of such prescribed price, they advise federal government of such determination for each category of consumers of natural gas in terms of Section 8(1) of Ordinance, 2002 and Rule 18(2) of Rules 2002;
f) As reproduced earlier in terms of Section 7 the criteria, reasoning and the analysis for such prescribed determination evolves from Section 7 of Ordinance 2002 which is supported through Rule 17 of the Rules 2002. Such tariff is of course determined keeping in mind the cost of substitute or alternate sources of energy such as petrol/diesel etc.;
g) The Federal government on receiving such advice from OGRA evaluate and re-advice OGRA within 40 days of receiving such determination for the issuance of notification of sale price of gas for each category of consumer in terms of Section 8(3) of Ordinance 2002 and Rule 18(2) of Rules 2002;
h) On receipt of such re-advice from Federal Government, the OGRA is required to issue a notification of gas tariff for each category of consumer which is now called a sale price of each category of consumer; (I have purposely used the word ‘advice’ and re-advice’ in order to eradicate any confusion since it is used twice in Section 8)
i) In an event where the federal government fails to give any advice (re-advice) within the prescribed period of 40 days, then:
a) if the gas tariff for any category of consumers determined by OGRA is higher than existing gas tariff and sale price for that category of consumer, OGRA is required to notify the new increased tariff in terms of Section 8(4) of Ordinance 2002 and Rule 18(3) of Rules 2002;
b) in case it is not so, the Act (Ordinance) is silent in such a situation however its effect would be determined hereunder subsequently.
9. These licensees whose estimated revenue requirements analyzed in first round by OGRA, at the end of same financial year may file a second petition before OGRA for determining its final revenue requirements (FRR) which petition is named as FRR petition. Through this petition OGRA takes into consideration the actual expenditure incurred by the licensee and other features and they may revise earlier determination in the light of such modification and alteration and advice federal government in relation to the prescribed price for each category of consumer. The second petition for FRR involves the same process as required for ERR.
10. Thus, under the Scheme of section 8 of Ordinance 2002 and Rules framed thereunder an independent mechanism which reflects a transparent determination is provided. Gas tariff charged ultimately is based on the determination made by OGRA for that particular year which is subject to revision in terms of FRR. This shows that maximum period between the date of determination of OGRA and the notification of new gas tariff can conveniently be calculated as 43 days. An independent body such as OGRA is established through Ordinance, 2002 for having an expert analysis of the determination of prescribed price.
11. While considering the brief facts of the case when the above statutory mechanism is applied it reflects as under:-
a) SSGC filed its petition for ERR for the year 2014-2015 with OGRA on 03.01.2014 wherein SSGC proposed a price of Rs.596.63 per MMBTU for industrial consumer/plaintiffs.
b) After following the mechanism laid down OGRA on 03.07.2014 issued its ERR determination as 469.04 per MMBTU.
c) On 31.08.2015 OGRA through impugned notification increased the price for retail consumers such as plaintiffs far beyond those prescribed in ERR determination.
d) On 01.01.2013 the earlier SRO which was in the filed carrying a notified price of Rs.488.23 per MMBTU which is available as Annexure D/3 to OGRA’s written statement;
e) SSGC ERR petition for fiscal year 2014-2015 proposed a price of Rs.596.63 per MMBTU for plaintiffs whereas OGRA’s ERR determination for the same year dated 03.07.2014 prescribed the price of Rs.469.04 per MMBTU for the plaintiffs.
12. Keeping this in mind it is to be noted that the impugned notification of 31.08.2015 provides the industrial rate as Rs.600 per MMBTU. It is to be noted that it was issued neither on the re-advice of the federal government nor the rate itself in consonance with prescribed determination by OGRA. It is a unilateral and symbolic determination without having any basis since it negates their own prescribed determination forwarded to the federal government. It is further to be noted that SSGC petition for ERR for the fiscal year 2015-2016 dated 19.03.2015 which is available on record proposed a price of Rs.508.11 per MMBTU which is based on the current international market of the crude oil which was declining significantly throughout that period. Based on that price for the year 2015-2016 the OGRA’s determination of ERR for the year 2015-2016 dated 18.12.2015 prescribe a price of Rs.422.24 per MMBTU (which copy is made available during course of arguments).
13. The tabulated form of the events mentioned above shows that it negates the time line provided in terms of OGRA Ordinance 2002 and the Rules framed thereunder, besides the fact that such prescribed determination was never re-advised by the federal government. In pursuance of the petitions filed by OGRA under section 8 for ERR the OGRA determined prescribed price on 03.07.2014. The OGRA is required to advice federal government in this regard by 06.07.2014 (within three days), which it did.
14. In terms of section 8(3) of the Ordinance 2002 and Rules framed thereunder the federal government was required to send its advice (re-advice) regarding prescribed price to OGRA by 16.08.2014. Had it been re-advised within the time, the OGRA was required to notify the new price whereas it notified a price on 31.08.2015 i.e. after a period of almost 17 months from the date of petition and after a year from the date of prescribed determination by OGRA. Such sale price through notification was neither issued on the advice of Federal government nor prescribed price was higher than most recent one to enable OGRA to notify the same. The prescribed price is lower than most recent one, so the necessity of issuing Notification for sale price at a lower rate in the absence of advice of Federal Government is not met by relevant section i.e. 8(3), (4) and (5) of OGRA Ordinance 2002.
15. Learned counsel for the plaintiffs in this regard has heavily relied upon the principle laid down by the Hon’ble Supreme Court that when a thing is required to be done under the law in a manner specified therein it must be done in that way. Counsel in this regard has relied upon the following cases:
i) Zia-ur-Rehman v. Syed Ahmed Hussain (2014 SCMR 1015)
ii) Muzahir Hussain v. Province of Sindh (PLD 2013 Sindh 285)
iii) Nazim, Okara v. Abbas Ali (2010 SCMR 1437)
iv) Raja Humayun Sarfaraz Khan v. Noor Mohammad (2007 SCMR 307)
v) Hakim Ali v. Muhammad Salim (1992 SCMR 46)
vi) Shaman Flour Mills v. PTC (PLD 1997 Lahore 447)
16. Thus in view of failure of the OGRA to notify the sale price within the period prescribed under the law, it renders the impugned notification illegal, on this count as well, apart from the fact that it was never in their domain and authority to issue a notification in relation to prescribed price which is far less than the price prevailing at that time in pursuance of a recent past notification. This is the point which I referred earlier to be discussed that in a situation where the federal government fails to re-advice the OGRA for issuance of a notification for sale price, the OGRA in case their prescribed determination is less than the previous/recent past notification they would be refrained from issuing any notification under the circumstances. Their authority could only be reacted provided the catalytic agent i.e. higher price was prescribed by it i.e. when their prescribed determination in relation to each category of consumer is higher than the previous (prevailing price) otherwise the prevailing price would continue to remain in field.
17. Mr. Salman Talibuddin, learned Addl. Attorney General, in addition has also pointed out that there is no time limit provided under the Ordinance 2002 and the rules framed thereunder for OGRA once the federal government re-advice the OGRA. Rule 18(4) provides that in the event where the federal government fails to re-advice the authority within the time specified in sub-rule 2 of Rules 2002 and the price for any category of retail consumer of natural gas determined by the authority under sub-rule 1 is higher than the amount recently notified as sale price, the authority shall notify in the official gazette the price as determined by the authority under sub-rule 1 to be the sale price of the said category of retail consumer of natural gas. The learned Addl. Attorney General may be correct that no time limit was provided to the OGRA but then it lacks the real mandate available to them firstly the determined price itself was less than the recent price prevailing and secondly by application of mind such notification ought ot have been issued within a reasonable time which in any event should not have been spilled over the next fiscal year as in this case it was issued after almost 17 months of the petition of SSGC and a year after the determination of prescribed price by OGRA. As to the reasonableness of time limit the case of Federal Land Commission v. Rais Habib Ahmed reported in PLD 2011 SC 842 can be considered.
18. The price recommended by OGRA in its ERR determination is Rs.469.04 per MMBTU for the year 2014-15 was less than the prevailing price of Rs.488.23 MMBTU (for the year 2013-14).
19. There is a need of carving out a distinction between a “determined/prescribed price for the consumer” and “sale price” for the consumer. OGRA only determines the prescribed price on the basis of estimated revenue requirements and that is the only determination that they forwarded to the federal government i.e. Rs.469.04 per MMBTU. It cannot be considered as a “sale price” for each category of consumer since this could only be culminated and matured into a sale price once the federal government sends it back to the authority/OGRA for issuing a notification considering it to be a sale price in the notification. Determined prescribed price of OGRA cannot prematurely be considered to be sale price under the given circumstances. The impugned notification further lacks its sanctity as the same was much higher i.e. Rs.600 MMBTU than the prescribed/recommended price of Rs.469.04 per MMBTU by OGRA itself.
20. At the time when the impugned notification was issued SSGC had already filed their ERR petition for the year 2015-16. The fiscal year starting from 01.07.2015 which ought to have been based on the new ERR determination for the fiscal year 2015-16 and not on any other basis. I am not inclined to involve in technical determination as to the price of the crude oil prevailing since such controversy could have been conveniently raised by the objectors before OGRA when public notices were issued however for the disclosure of the facts I may observe that for the ERR determination for the year 2014-15 oil price was US $.104.66 per barrel which has come down to US $.49.20 when the impugned notification was issued. For the year 2015-16 the proposal made by SSGC in their petition is 508.11 per MTTBU which was lower than the price notified by OGRA vide impugned notification on 31.08.2015 i.e. 600 per MTTBU. Even if the yardstick as applied in providing subsidy to the domestic consumer earlier, applied presently while issuing notification, it could still yield to a lessor price than notified. The OGRA itself determined ERR for the year 2015-16 as 422.24 per MTTBU.
21. These are just facts and analysis however I am more inclined to decide the controversy involved in these suits on the touchstone of section 8 of Ordinance 2002 and the Rules framed thereunder and have reached to the conclusion that the impugned notification dated 31.08.2015 lacks the sanctity of law and it cannot be validated in terms of section 7 and 8 of Ordinance 2002 and the rules framed thereunder.
22. Upshot of the above discussion is that the issue No.1 is answered in negative and consequently the suits are decreed in relation to the issue as above.
Dated: Judge