Jawwad S. Khawaja, J.--These two constitutional petitions (C.P. 33 of 2005 and C.P. 34 of 2005) have been filed by Engr. Iqbal Zafar Jhagra and Senator Riakhsana Zuberi. The petitioners have raised a number of issues about the pricing of petrol and natural gas which have a direct beating with the enforcement of the fundamental rights of the people of Pakistan who have to bear the brunt of such prices.
2. Amongst other things, the- petitioners allege that the price at which Compressed Natural Gas
(CNG) is being sold to vehicle owners is not being determined in accordance With the law and is therefore inflated. There is no denying the fact that CNG prices have indeed increased over the last few years. According to figures provided by the Secretary, Ministry of. Petroleum, in August 2008, CNG was being sold in Pakistan at the rate of Rs, 33 per kg. Only four years later, in September 2012, it was being sold at Rs, 95 per kg almost, three time the original prices. The number of citizens affected by this increase is also very large. According to figures provided by the Oil and Gas Regulatory Authority (OGRA), no less than 3395 licenses for CNG marketing have been granted. The number of users of CNG whether direct, or as poor commuters traveling on the roofs of buses, who depend on public transport is estimated to run into millions, and around 12% of the total gas in the national transmission system is devoted to the CNG sector.
3. While the petitioners have raised a number of issues, in the present order, we confine ourselves to only one: the pricing process for . CNG. The Court did hear some arguments about the issue of printing process of natural gas sold directly to consumers by SSGC and SNGPL and the impact of unaccounted for natural gas (UFG) losses on its determination. However, Mr. Abid Hasan Minto, Sr.
ASC, learned counsel for SSGC and SNGPL apprised the Court that the same issue was moot in writs filed before the High Courts of Sindh and Lahore. In the latter Court, arguments have been concluded and the judgment-is presently reserved. Mr. Minto therefore, requested that consideration of the issue relating to UFG losses be postponed to a date till at least one of the High Courts has pronounced its judgment. This suggestion has been made to enable all concerned to examine the reasoning which prevailed with the High Court. The suggestion being reasonable, we confine ourselves to the issue of CNG pricing, leaving the rest of issues for subsequent hearings.
4. It is clear from a review of the relevant laws that the primary responsibility for determining the sale price of CNG for consumers falls on OGRA. Rule 13 of the Compressed Natural Gas (Production and Marketing Rules), 1992 states that: The Authority [OGRA] shall determine and notify the sale price in accordance with the policy guidelines issued by the Federal Government, from time to time. (2) No license[e] shall charge price from its consumer which is higher than the sale price notified by the Authority, [OGRA] from time, to time.
5. It is correct, therefore, mat the policy guidelines issued by the Federal Government are to be given consideration by OGRA. Section 21 of the OGRA Ordinance also states in similar vein that "... the Authority [OGRA] shall comply with the policy guidelines [issued by the Federal Government]..."
If read out of context, these provisions could create the impression that in matters such as price determination, the Federal Government enjoys co-extensive powers with OGRA; or that, at least, its policy, guidelines trump any other considerations which OGRA may have before it. However, this reading of the text runs against the overall scheme and text of the OGRA Ordinance. Policy guidelines are exactly what they purport to be i,e, guidelines at most. The statute envisages that the regulatory functions are to be performed by an Authority which is "independent in the performance of its functions", (S, 3(2)). This independence is actualized by laying down stringent objective appointment criteria of "eminent professionals of known integrity and competence" for key decision-makers (Section 3), vesting them with security of tenure (S. 3(8) and S. 5) and funding OGRA through its own statutory fund (S. 18). Clearly, all of these measures were taken by the legislature to provide OGRA with a strong measure of independence from the Federal Government.
The measures would be rendered entirely superfluous if we construe Section 21 of the Ordinance and Rule 14 in a manner which makes OGRA bound by the directives of the Federal Government.
Since, the general principle of statutory interpretation is that the language of the legislature must not be rendered superfluous, we take it that Section 21 and Rule 14 imply only that OGRA must include the policy guidelines of the Federal Government in its consideration and decision-making process; it is not, however, bound by the same. That the legislature chose the term "policy guideline instead of "directive" or "order corroborates this interpretation. We may also add that one of the principal raisons d'etre, of OGRA as clearly spelled out in its statute is the protection of the consumer who ultimately is to bear the price of CNG.
6. Accordingly, we consider OGRA the primary bearer of regulatory power and have examined its exercise of this power. In our order dated 25.10.2012, we examined the breakup of CNG retail price submitted by. OGRA, The same is also reproduced as under:-- CNG CONSUMER PRICE DETAILED BREAK UP.
Sr# Components Price w,e,f, 22.10.2012 Region-I Rs, /Kg Rs, MMBtu %Price w,e,f, 22.10.2012 Region-II Rs, MMBtu % A Average Well head price/cost of18.04 358.87 92%16.48 358.87 92% gas paid to exploration companies"- B Operating Coat of Gas Companies1.14 22.69 6% 1.04 22.69 6% C Return on investment to as companies Other0.872 17.34 4%0.796 17.34 4% D incomes (net of Prior year adjustment if any, etc.)-0.53 -10.63 -3%-0.49 -10.63 -3% E=A to D Average Prescribed price of natural gas19.51 388.27 100%17.83 388.26 100% F Sale price of natural gas for CNG stations as advised by Federal Govt. 'under Section4(3) of OGRA Ordinance including GOS/cross subsidization 35.19 700.32 38%32.14 700.02 38% G "Operating Cost of CNG Stations20.80 113.80 22%20.80 453.01 25% H Profit of CNG Station Owners.11.19 222.60 12%10.59 230.61 13% IGIDC13.25 263.57 14%9.18 200.00 11% J GST (25% of Price F+ 1)12.10 240.69 13%10.33 255.00 12% K Differential Margin for Region-II----- 1.50 32.67 2% Total CNG Consumer Price (F.K)92.53 1,840.98 100%84.54 1,841.31 100% Petrol Price (Rs, /Ltr) 102.08 3.069 102.08 3.069 Well head price (cost of gas price) as per GPAS for Sui & Kandhkot is attached for illustration (copy annexed)
Operating Cost includes compression cost, maintenance, depreciatio fee etc as per MoU signed b/w CNG Association & FC.
CNG Price prices on 15.10.2012 Petrol price 94.66 1,883 103.40 3,13986.48 1,883 103.403,139
7. We have concluded that various items in formula appear to have been determined arbitrarily and not in accordance with law and without any reference to the accounts of CNG stations. The operating cost of CNG stations was, for instance, admittedly calculated "as per MoU signed b/w ONG Association & [Federal Government]. Upozi examination, it turned out that the said Memorandum of Understanding dated 25th August, 2008 had been entered into by the Government -of Pakistan and the All Pakistan CNG Association, CNG Dpalers Association and CNG station owners. This MoU purported to fix the price of CNG in the whole country for a certain period and was "subject to revision, through identical consultative process between the parties, on bi- annual basis" (clause e, MoU). Fixing the -sale price of CNG in this manner represents a clear violation of the law. OGRA, which bears the primary responsibility in this area, was not even "a parry to the Mon Yet, instead of intervening to protect the public interest, it simply chose to enforce the MoU. This constitutes a blatant abandonment of its duties and abdication of its statutory role as protector of the interests of the citizens who have to bear the brunt of unjustifiable prices.
Essentially, this represents one of those sad episodes of our history where the cartel of suppliers, the Government and the regulator came together to enact a grand exploitation of the poorest and most helpless amongst the country's citizens.
8. Taking notice of this situation, in our order dated 25.10 2012. we adjourned the matter "with direction to the Chairman OGRA to fix the price of CNG" in as fair. lawful and diligent manner It may be reiterated that in that, order the Court did not fix the price of CNG; it only referred the matter to OGRA and the Federal Government for ensuring due and proper pricing as commanded by law.
Pursuant to that order, on the same date, OGRA determined a new price, vide S.R.O. (I)/2012, which came to Rs, 61.64 for Region I and Rs, 54.16 for Region II.
9. In response to this second price formula, during the hearing on 1.11.2012, Mr. Wasim Sajjad and Mr. Abdul Hafiz Pirzada learned Sr. ASCs entered appearance on behalf of the CNG licensees and sought two weeks time, which was granted. They contended that the price set by OGRA was too low and not commercially feasible: On 19.11.2012, OGRA submitted a report (CMA No, 4762/12) which suggested a new consumer price supported by a certain audit report. Adjourning the matter, the Court once again directed the "stakeholders [to] discuss amongst themselves and come up with an acceptable price formula, keeping in view the interest of all of them, particularly the consumers' as mandated by law.
10. During hearings on 04.12.2012, 05.12.12 and 06.12.12, OGRA contended that it could not come up with a satisfactory pricing formula since it had not received the audited accounts of licenses, which would allow it to determine the various price items in a fair and informed manner. The Secretary, Ministry of Petroleum apprised the Court that the Federal Government, on its part, was yet to issue policy directions, but the matter would soon be taken up by the Economic Coordination Committee of the Cabinet. On 17.12.2012, OGRA submitted another report (CMA No, 5189/2012) proposing a price of Rs, 73.96 for Region I and Rs, 65.52 for Region II. As late as the last hearing, i.e. 20.12.2012, neither had OGRA been, able to come up with a fairly determined, evidence-based pricing formula, nor had the Cabinet issued any directions to resolve this long-standing dispute.
11. From the foregoing, it is clear that there are differing views prevalent about appropriate price of CNG. What has, however, been thrashed out in great detail, through these proceedings, is the process whereby OGRA is legally required to determine prices as well as the . principles which it is supposed to apply during this process. OGRA, it may be reiterated, has been envisaged as an independent body which is supposed to protect the public interest. Its failure to protect ordinary consumers from oligopolistic and monopolistic activities cannot be condoned.
12. The learned counsel for OGRA candidly conceded that the earlier pricing formula did not meet the legal criteria as demanded statute. In fact, this act of OGRA as well as various other practices represented gross violations of the law, resulting in the infringement of the fundamental rights of the people of Pakistan by extracting from them, unconscionable amounts for the unjust enrichment of the few. It may be' recalled that in Muhammad Yasin v. Federation of Pakistan (PLD 2012 SC 132), the Court had taken note of the state of affairs at OGRA, striking down the illegal appointment of Tauqeer Sadiq as Chairman OGRA. In that judgment, the Court also took note of serious allegations of financial wrongdoings amounting to billions of Rupees, ordering NAB to investigate the matter. Those investigations are still going on. Whatever its state of affairs in the past may have been, OGRA is once again directed to discharge its duty in a legal and fair manner.
A day-light assault on the fundamental rights of the people of Pakistan and their exploitation in violation of Articles 3 & 5 of the Constitution cannot the allowed to continue.
13.We reiterate that the determination of prices is a power vested by various laws on the executive functionaries and agencies of the State established under law. Consequently, the executive has also been equipped by the law with sufficient expertise and enforcement capability for this purpose. Our duty however, extends to reviewing the manner in which the executive exercises its powers and to see that the fundamental rights of citizens including the right to their hard earned income is protected. This has been highlighted in the judgment in the case of Muhammad Yasin supra. In the present case, through our order dated 25.10.2012, we exercised this power by striking down OCRA's pricing formula and directing it to prepare a new formula, in accordance with law. As the protector and enforcer of the fundamental rights of the people of Pakistan, the Court could not have done otherwise.
14. We note with great regret that throughout these hearings on issues of the greatest public importance, the approach of the executive authority which shares with OGRA the responsibility for sorting out this matter of highest significance, has not been helpful. In various hearings we were informed that the Federal Government is seized of this important issue and would take steps for its resolution. On 17.12.2012 we were again told that the Cabinet was to meet on 18,12.2012 and would takes decisions for resolution of the issue and also give policy guidelines. Yet, even as millions of CNG users continue to suffer because of the prevailing deadlock no guidelines were issued on 18.12.2012.
15. Since OGRA has still not been able to come up with a pricing formula based on evidence and in accordance with the prescribed process, it is directed once again to discharge its obligations in accordance with the law. It must do so in a swift manner, and after obtaining all necessary feedback from the stakeholders.
16. The questions relating to UFG losses and 'other issues raised in the Constitutional petitions will be considered at the next hearing.