' AYESHA A. MALIK J.---This judgment decides upon the common issues raised in the instant Petition as well as Writ Petitions Nos.31817/2013, 6569/2414, 1461/2016, 9214/2011, 9693/2011 and 262/2016.
2. The Petitioners are all in the business of marketing Liquefied Petroleum Gas ("LPG") pursuant to licenses issued by Respondent Oil and Gas Regulatory Authority ("OGRA"). The Petitioners purchase LPG from LPG Producers, such as Respondent No,5, Oil and Gas Development Company Limited ("OGDCL") and sell it to consumers. The Respondent No,5 is a public listed company whose majority shares are owned and controlled by the Government of Pakistan and is one of the largest producers of LPG in Pakistan. A dispute has arisen between the parties on account of the charging of Signature Bonus by the Respondents for the purposes of allocating contracts for lifting LPG from different gas fields. They are aggrieved by the role of OGRA and the charging of the Signature Bonus by OGDCL which has increased the price of LPG for the Petitioners.
3. The Petitioners in the instant Petition and W.P. No,1461/2016 have sought a declaration that the LPG price cannot go over and above the Saudi Aramco Contract Price ("Aramco Price"). The five Petitioners in W.P. No,31817/2013 have impugned Tender Notices for upliftment/sale of LPG from Makori Field, Tehsil Wanda Daud Shah, District Karak, KPK (OGDCL Share) and from Sinjhoro field, District Sanghar (Sindh) as the Tender is based on Signature Bonus. All the five Petitioners have their registered offices in Punjab and seek relief against OGDCL and OGRA. In the same way, the Petitioner in W.P. No,6569/2014, has impugned Tender Notice dated 21.2.2014 for upliftment/sale of LPG from TAL Block, District Karak as it is based on Signature Bonus.: It also has its registered office in Punjab and has sought relief against OGDCL and OGRA. In W.P. No,262/2016, the Petitioner has impugned decision dated 6.12.2006 passed by the Economic Coordination Committee ("ECC") of the Cabinet of Federal Government. The said Petitioner is a private company limited by shares which' holds a LPG marketing license from OGRA to sell/ uplift extracted gas from different locations where gas fields exist. It is also noted that Petitioners No,4 and 5, Pioneer Gas (Private) Limited and Tez Gas (Private) Limited in W.P. No,31817/ 2013 are also Petitioners Nos.1 and 2 in the instant Petition.
The Petitioner, Sehwan Gas (Private) Limited in W.P. No,6569/2014 is also Petitioner No,3 in W.P.
No,33661/2015. Essentially the named Petitioners seek the same relief through different Petitions.
4. The basic issue between the parties is the demand for Signature Bonus made by Respondent No,3 for the purposes of award of contract for lifting LPG from different gas fields. In terms of the impugned tender notices, OGDCL will allocate LPG lifting contracts on the basis of non-refundable Signature Bonus payable by the successful company prior to signing of the Sale/Purchase Agreement. The contract offered is for a period of five years and the marketing company offering the highest Signature Bonus will be declared the successful bidder. The remaining bidders in descending order of the offer made for Signature Bonus will be given the option to match the price of the highest bidder so that quantity of LPG produced by OGDCL is lifted by the buyer. In this regard, the Petitioners are aggrieved by the act of OGRA for not regulating the LPG price and ensuring that a premium over and above the price is not charged.
5. The counsel for the Petitioners argued that the payment of Signature Bonus is against the regulatory framework provided under Sections 7 and 21 of the Oil and Gas Regulatory Authority Ordinance, 2002 ("OGRA Ordinance"), LPG (Production and Distribution) Rules, 2001 ("2001 Rules") and the various policies introduced from time to time being LPG (Production and Distribution)
Policy, 2006 ("2006 Policy"), LPG (Production and Distribution) Policy, 2011 ("2011 Policy") and the LPG (Production and Distribution) Policy, 2013 ("2013 Policy"). It is further argued that the demand for Signature Bonus raises the price of LPG base stock which is controlled by the Aramco Price in terms of the letter issued by the ECC dated 6.12.2006. This means that the base stock price cannot exceed the Aramco Price. However, Signature Bonus raises the price such that it exceeds the Aramco Price which is not permissible as per the policies. They further argued that the ECC decision of 2006 holds the field and in terms thereof, LPG producers are free to fix the price of LPG base stock provided it does not exceed the Aramco Price. It is their case that LPG producers cannot charge a premium over and above the Aramco Price. The counsels for the Petitioners further argued that by charging Signature Bonus, the Respondent OGDCL is exploiting its position as a dominant state entity and is unjustly enriching itself at the expense of the Petitioners and the common consumers of LPG. It is their case that OGRA has distanced itself from this dispute and instead of regulating the issue and ensuring that the price of LPG does not exceed Aramco Price, they have abdicated their function in favour of the Federal Government.
6. The Petitioner, WAK Limited in W.P. No,9214/2011 seeks a declaration that it may be allowed to lift LPG from Adhi Gas Field. Learned counsel for the Petitioner argued that the Petitioner has a vested right to lift gas from the Adhi Gas Field since it has a contractual arrangement with the Respondent OGDCL from 1990. Stated there appears to be no reason to now tender the same contractual rights on the basis of Signature Bonus. Learned counsel submitted that Signature Bonus is like a 'Pagri' payment which essentially favours companies with deep pockets and therefore is tainted with mala fide.
7. Report and paravvise comments have been filed on behalf of the Federal Government, Ministry of Petroleum and Natural Resources, Islamabad. It is their case that the LPG price mechanism was deregulated since September 2010 and the Government exercises no control in the fixation of LPG price. It is their case that price is fixed by market forces and thereafter OGRA regulates and monitors the reasonableness of the price. It is also their case that the Aramco Price is no longer relevant as LPG price has been deregulated. They clarified that the ECC decision of 6.12.2006 no longer holds the field and was superseded by the subsequent decision of 1.1.2013.
8. Report and parawise comments have also been filed on behalf of Respondent OGRA. Learned counsel for OGRA argued that the 2013 Policy is the prevailing policy which superseded all previous instructions, orders and policies issued by the Government from time to time. He stated that as per the 2013 Policy, LPG pricing and allocation is de-regulated and OGRA monitors the reasonableness of the price with the objective that the price remains within a reasonable margin after accounting for primary transportation, all operating and administrative costs and taxes incurred by the LPG marketing companies and distributors. It is their case that OGRA does not have any mechanism for determining the LPG price as market forces control the price. It is further contended that the issue of Signature Bonus does not fall within their domain as it has nothing to do with the price of LPG.
9. Respondent SSGC has filed parawise comments as well. Counsel for the stated Respondent agreed that the price of LPG was deregulated and that the ECC letter of 6.12.2006 is no longer relevant. He further argued that the Petitioners have no legal or vested right which can be enforced by this Court in writ jurisdiction. He argued that the Petitioners have challenged the tender process in which no right has been created in their favour. Learned counsel submitted that the 2013 Policy was issued pursuant to the ECC's decision dated 1.1.2013. Therefore the decision of the ECC 6.12.2006 and earlier policies are no longer relevant. Learned counsel further submitted that LPG prices are no longer linked to Aramco Price and that this fact is known to all parties. Learned counsel argued that Signature Bonus is a mechanism used for selection during the tendering process and most of the Petitioners before the Court, have entered into an agreement with the stated Respondent whereby they have already paid Signature Bonus. In this regard, he has specifically referred to the Petitioners Nos.1 to 5 in W.P. No,31817/2013 and Petitioner Wak Limited in W.P. No,9214/2011 who participated in the bidding process in Sindh and offered to pay Signature Bonus and in some cases have paid the Signature Bonus. Learned counsel further argued that the Petitioners are not obligated to participate in the tender process if the terms of the tender or contract are not acceptable to them. Hence the Petitions are not maintainable.
10. By filing of parawise comments learned counsel for Respondent PARCO also supports the 2013 Policy. Learned counsel stated that the matter relates to the 2013 Policy and the ECC decision dated 1.1.2013. Learned counsel further submitted that Signature Bonus has been paid in previous tenders and as such the Petitioners have no vested or fundamental right on the basis of which they can challenge the methodology adopted by the Respondents to award contracts. Learned counsel further argued that Respondents Nos.2 to 5 in the instant Petition have adopted selection through the Signature Bonus as there are more than 100 OGRA Licensed GMCs participating, in the tendering process and in this way the most credible and reliable GMCs come forward. Learned counsel further submitted that an alternate to the Signature Bonus method, a profit sharing arrangement, however, that is up to the agency seeking to tender out the contract and as such the Petitioners have no right in the matter.
11. Learned counsel for the Respondent OGDCL in support of report and parawise comments argued that the case of the OGDCL is that Federal Government does not determine, fix or' notify the price of LPG. Furthermore Aramco Price is no longer relevant. The prevailing policy is the 2013 Policy based on the ECC letter of 1 .1.2013. Learned counsel further argued that Signature Bonus is a way of selecting successful bidders and is a transparent and competitive process. Learned counsel further submitted that this selection mechanism is not new to the system and has been followed since 2013 in which some of the Petitioners have participated. Learned counsel clarified that Signature Bonus is not a component of the LPG price, hence the entire case of the Petitioners is built upon the misconception that Signature Bonus increases the LPG price. He explained that Signature Bonus ensures that capable and interested parties come forward and selection is not based on favouritism nor it discriminatory. The highest bidder gets the contract and there is no unjust enrichment in this process as Signature Bonus represents the commercial deal between the parties. Since there is no price on the basis of which tender process can take place, auction is based on Signature Bonus. Learned counsel further argued that the Petitioners have no legal or vested right to question the legality of Signature Bonus as no fundamental or vested right of the Petitioners has been infringed and most of the Petitioners have paid Signature Bonus in other tenders. It is their case that Signature Bonus is a one time payment made for securing the license and the Petitioners are not obligated to enter into the tendering process if they do not wish to pay the Signature Bonus. It is also pointed that for the sale of LPG from Makori Field in the tendering process, the bids were opened on 11.12.2013 and for sale of LPG from Sinjhori Field, the bid was opened on 12.12.2013. The Petitioners before this Court namely Tez Gas (Private) Limited, WAK Limited, Petroleum Gas Company (Private) Limited, Noor LPG Company (Private) Limited and Pioneer Gas (Private) Limited have all participated in the tendering process which was based on Signature Bonus. This fact has not been denied by the stated Respondents.
12. Learned counsel for the Respondent OGDCL in relation to W.P. No,9214/2011 argued that the Petitioner is seeking performance of a contractual obligation after the expiry of the contract which stance is not maintainable in the instant writ petition. Learned counsel argued that the Petitioner has not disclosed that the Petitioner is a defaulter who did not pay the relevant dues at the time and therefore its contract was terminated on 31.7.2004. Learned counsel further submitted that the Petitioner has no vested right to seek allotment of LPG from Adhi Gas Field or from any specific field.
15 I have the learned counsel for the parties on many dates and gone through the available record and the documents relied upon by the parties.
14. The core issue before the Court is the charging of Signature Bonus and whether the Respondents can require the upfront payment of Signature Bonus to award the contract for lifting of gas. The role of OGRA with respect to price fixation and Signature Bonus is also in issue in these Petitions.
15. The relevant law with respect to pricing of LPG is contained in Rule 18 of the 2001 Rules and clause 3.4 of the 2013 Policy. The 2001 Rules and the 2013 Policy set out the manner in which the LPG price has to be fixed. Rule 18 of the 2001 Rules reads as follows:- ' Price of LPG base-stock and LPG:- (1) A licensee shall charge from another licensee or a consumer a reasonable price of LPG base-stock and LPG, during a specified period, which in no case shall be less than one month, and the licensee shall inform about such prices to the Authority. The licensee shall also publicise such prices in the media for information of the public.
(2) In case the prices of LPG base-stock or LPG so fixed by a licensee under sub-rule (1) are not considered to be reasonable or in the event of any cartel formation, the Authority may, in the public interest, determine a reasonable price of LPG base-stock or LPG, in accordance with the prevailing policy of the Federal Government which a licensee shall charge from another licensee or a consumer.
' Clause 3.4 of the 2013 Policy reads as under:- 3.4.1 The Government will continue to follow its deregulation policy and the Price of LPG supply chain will not be determined or notified by the Government. The Government will charge a Petroleum Levy from local LPG producers as provided in the Petroleum Products (Petroleum Levy)
Ordinance, 1961 as specified from time to time by MP&NR and levy of this levy be so fixed to protect investment in local LPG production as well as to encourage imports.
3.4.2 To ensure that cartels are not formed and high consumer price of LPG is not charged, MPNR and OGRA will determine the quantity of LPG to be imported to meet the gap between demand and supply. This quantity will be imported by public sector Sui companies. Besides, the private sector companies can also import LPG to meet the demand.
3.4.3 The LPG consumer price/retail prices will be determined by Market forces in accordance with Government's de-regulation policy. However, OGRA will oversee/monitor that LPG Prices remain within a reasonable margin after accounting for primary transportation, all operating and administrative costs and taxes for LPG marketing companies and distributors.
3.4.4 OGRA will intervene in case of deviation from the above basis and would also involve the local administration to ensure punitive action against the defaulting companies and distributors.
In terms thereof, the price of LPG is determined by market forces. The Government has no role to play in LPG price fixation. Furthermore OGRA as the front line regulator determines the reasonableness of the price so as to ensure that cartels are not formed or that high price of LPG is not charged from the consumer. They also do not fix or control the price of LPG. The counsel for the Petitioners argued their case essentially on the ground that Signature Bonus is a component of the LPG price and therefore has to be regulated by OGRA and cannot exceed the Aramco Price. A bare review of the 2013 Policy clarifies that LPG price is deregulated and that neither the Government nor OGRA is