SHAHID JAMIL KHAN, J.---Petitioners are Licensed Marketing Companies of Liquefied Petroleum Gas ("LPG"). Common grievance, raised in this and connected petitions, (Writ Petitions Nos, 95937, 112913, 112917, 127693 of 2017 and 166996 of 2018), is regarding "Signature Bonus" being charged by Producing Companies of LPG like Oil & Gas Development Company Limited ("OGDCL") for awarding contract of lifting LPG from different gas fields.
2. The petitioners' side argued that the Signature Bonus could not be charged by respondents Producing Companies, being over and above the Price Notified by the Federal Government and not approved/regulated by Oil & Gas Regulatory Authority ("OGRA")/respondent No,2. To support this contention, Liquefied Petroleum Gas (Production and Distribution) Policy, 2016 ("Policy of 2016") was read with Rule 18 (as amended in August 2017) of the Liquefied Petroleum Gas (Production and Distribution) Rules, 2001 ("Rules of 2001").
It was submitted that auction of LPG at an exorbitant price was assailed earlier also through Writ Petition No,113 of 2017. It was admitted by learned counsel for OGRA that Policy of 2016 was not being implemented for the reason that corresponding amendments in the Rule 18 of the Rules of 2001 had not been notified in the Official Gazette. However, case was referred to OGRA on its undertaking that the dispute would be looked into and decided by it in exercise of powers under the Rules of 2001. The Court took notice of the fact that some of public functionaries were not discharging their duties as required under the relevant Statute, therefore, a direction was given to the Secretary, Ministry of Energy (Petroleum Division) for fixing liability of not controlling the price of LPG. In pursuance of the directions, Rule 18 was substituted through S.R.O. 68(KE)/2017--dated 07.08.2017 ("SRO, 68").
3. These petitions were opposed by Barrister Umair Majeed Malik, Advocate appearing for OGDCL (the producing company), by submitting that issue of Signature Bonus has already been settled by learned Single Bench of this Court in Tez Gas (Private) Limited etc. v. Oil and Gas Regulatory Authority and others (PLD 2017 Lahore 111). It is argued that under Section 3.1.1 of the Policy of 2016, the Federal Government has authorized the Producers to evolve their own procedure for transparent and competitive bidding process. Further argued that Signature Bonus is not a component of LPG price, therefore, is not required to be regulated by OGRA.
4. Barrister Haroon Dugal, Advocate for OGRA submitted that after insertion of existing Rule 18 through the SRO 68, some letters were written to Federal Government for fixation of price but the notification was not issued by respondent No,3 (Secretary, Ministry of Energy (Petroleum Division)).
Responding to the arguments that OGRA was not regulating the affairs of production and distribution of LPG, learned counsel submitted that regulation of petroleum products by OGRA is subject to guidelines from Federal Government as envisaged in the Policy of 2016 and existing Rule
18. He explained that for fixation of price, OGRA had to act on advice of Federal Government, which statedly was not issued. However, during proceedings, an advice dated 30.01.2018 by Federal Government and a notification dated 01.02.2018 by OGRA were placed on record. It was not denied that Signature Bonus, being part of profit margin of the Marketing Company, was required to be regulated by OGRA. However, learned counsel sought some time to seek instructions in this regard.
On subsequent date, Chairperson OGRA (Mrs. Uzma Adil Khan) appeared and accepted that Signature Bonus was required to be regulated by OGRA and undertook that the dispute of charging Signature Bonds, as raised in this and connected petitions, would be looked into and decided.
5. Sardar Qasim Farooq, Advocate for the petitioner, while arguing in rebuttal, produced copy of letter dated 06.02.2018 issued by OGDCL, addressed to one of the Marketing Companies wherein it is written that Signature Bonus is over and above the prevailing LPG base price. Issuance of this letter was not denied by learned counsel for the respondent/OGDCL.
6. Mr. Shahid Hamid, Advocate, represented LPG consumers, after acceptance of application under Order I Rule 10 C.P.C., and argued that OGRA was not performing its functions as required under the Statute and Rules, therefore, burden of exorbitant price was being borne by consumers. He argued that a Committee was constituted, for determination/fixation of LPG price, consisting of members from producing and marketing companies without any representation of consumers to protect their interest. He endorsed the arguments that after substitution of the Rule 18 read with the Policy of 2016, fixation of LPG price and profit margins of Marketing Companies etc. were to be approved/regulated by OGRA.
7. Heard, record perused.
8. The judgment in Tez Gas Case (supra) delivered by a learned Single Bench of this Court is examined, whereby charging of Signature Bonus was held as legal for the reason that Liquefied Petroleum Gas (Production and Distribution) Policy Guidelines, 2013 ("Policy of 2013") did not envisage regulation of LPG price, which was to be determined by marketing force. Relevant part from the judgment is reproduced hereunder:- "15. ....
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 required to fix the price of LPG. In fact clause 3.4.1 of the 2013 Policy reveals that the 2013 Policy Guidelines on LPG Pricing is in continuation of the Government's deregulation policy which has been in force since 2011. It also clarifies the role of OGRA such that OGRA will only intervene if the LPG price becomes unreasonable. In such cases OGRA can look into the reasonableness of the price after accounting for certain given factors. The record also shows that the Aramco Price is not relevant for the purposes of fixing base stock price because price is fixed by market forces. Pursuant to the ECC decision dated 1.1.2013, the 2013 Policy was issued which requires price to be fixed by market forces and not the Aramco Price. Furthermore Clause 4(iii) of the 2013 Policy clearly provides that the 2013 Policy supersedes all previous instructions, orders and polices issued by the Government from time to time. Since this Policy was approved by the ECC on 1.1.2013, the letter of 6.12.2006 by the ECC is no longer relevant on this issue."
9. The Policy of 2016 is also examined, which has superseded the Policy of 2013. The Policy of 2016 was issued with approval of Council of Common Interest ("CCI") through S.R.O. 800(1)/2017 dated 11.07.2017. It has introduced a regulated regime for Production and Distribution of Liquefied Petroleum Gas. As noted in its preamble, the deregulation policy of LPG had failed to achieve its intended objective of enhancing availability of LPG at affordable prices.
Under its Section 3.1.1, the LPG is required to be disposed of "in a transparent manner through competitive bid process to the licensed LPG marketing companies on terms and conditions to be settled between the Buyer and Seller, subject to LPG Pricing as provided in section 3.4 of this Policy". Its section 3.4.1 requires that OGRA will regulate and notify the prices of indigenous LPG, subject to policy guidelines of the Federal Government. Producers' Price, Margins of Marketing and Distribution Companies and Consumer Prices, are also required to be notified by the OGRA under this Section. Section 3.4.5 envisages that Maximum Price at all levels of the supply chain shall be regulated by OGRA. Section 3.4.6 authorizes OGRA to intervene in case of deviation from the above notified price. The Section 3.4 is reproduced hereunder for ease of reference:- "3.4 LPG Pricing 3.4.1 Subject to Policy Guidelines of the Federal Government, the Oil and Gas Regulatory Authority will regulate and notify the prices of indigenous LPG including Producers' Price, Margins of Marketing and Distribution Companies and Consumer Prices.
3.4.2 The Government may 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 the Federal Government.
3.4.3 The Federal Government will, from time to time in consultation with OGRA and relevant stakeholders, determine the quantity of LPG to be imported to meet any gap between demand and supply; this quantity will be imported by Public Sector companies. Petroleum Levy on LPG or Gas Infrastructure Development Cess (GIDS) may be utilized to subsidize the LPG imported by Public Sector companies for bringing the prices equal to local LPG prices for Domestic sector supplies.
3.4.4 Tariff for LPG Air-Mix for supply to Domestic and commercial consumers will be as determined by the Federal Government from time to time.
3.4.5 LPG prices will be regulated with a Maximum Price at all levels of the supply chain. However, Producers, Marketing Companies and Distributors may sell below the Maximum Price determined from time to time.
3.4.6 OGRA will intervene in case of deviation from the above pricing basis and would also involve the local administration to ensure punitive action against the defaulting Marketing Companies and Distributors."
10. Earlier, charging of excess price, in presence of the Policy of 2016, was assailed through Writ Petition No, 113 of 2017. OGRA admitted before the Court that corresponding amendments were not brought into the Rules of 2001, however, in pursuance of direction, amendments were made in the Rules of 2001 through SRO 68 and Rule 18 was substituted. The substituted/ existing Rule 18 is reproduced hereunder for facility:- "18. Price of LPG base-stock and LPG:- (1) Subject to prevailing Policy Guidelines of the Federal Government, the Oil and Gas Regutory Authority shall regulate and notify the prices of indigenous LPG including Producers' Price, Margins of Marketing and Distribution Companies and Consumer Prices as may be revised by Ministry of Petroleum and Natural Resources from time to time.
(2) A licensee shall charge from another licensee or a consumer, price of LPG base-stock and LPG as notified by the Authority in pursuance of prevailing LPG policy of the Federal Government. The licensee shall also publicize such prices in the media for information of the public and shall also inform about such prices to the Authority. LPG prices shall be regulated with a maximum price as notified by OGRA at all levels of the supply chain. However, Producers, marketing companies and distributors may sell below the maximum notified price. In case licensee intends to sell below the notified prices, the same shall be intimated to the authority forthwith and licensee shall re- publicize such prices in the media without delay.
(3) In- case the prices of LPG base-stock or LPG so being charged by a licensee under sub-rules (1 & 2) are over and above the notified price of Authority, the Authority in public interest shall intervene and shall also involve the local administration to ensure punitive action against the defaulting licensees."
11. Perusal of the Rule 18 shows that policy guidelines given in the Section 3.4 of the Policy of 2016 have been translated into it. Now the law requires regulation of LPG Pricing at all levels of supply chain by OGRA, which is bound to notify the prices of indigenous LPG including Producers' Price and Margins of Distribution Companies on advice by the Federal Government, which means; Production and Distribution of LPG has been subjected to regulated regime.
The judgment and verdict given in Tez Gas Case (supra) is based on the Policy of 2013 and the then Rule 18, which did not require regulation of production and distribution of LPG, therefore, the judgment has lost its binding force for the disputes and questions arising after issuance of the Policy of 2016 and substitution of the Rule 18.
12. The nature of Signature Bonus is apparent from the OGDCL's letter, dated 06.02.2018, addressed to Marketing Companies, which shows that the amount of Signature Bonus shall be over and above LPG base price. This factual position was not denied by OGDCL's counsel. Signature Bonus is a pre-condition for awarding contract of lifting LPG from different gas fields. Admittedly, this pre- condition is imposed without approval and before fixation of price by OGRA. Learned counsel for OGDCL himself argued that the amount under Signature Bonus was to be paid by the Marketing and Distribution Companies from their margin. Because the margin of Marketing and Distribution Companies is now required to be regulated by OGRA, therefore, its approval by the OGRA is necessary.
13. The Policy of 2016 (S.R.O. 800(1)/2017) was approved by CCI, which is created under Article 153 of the Constitution of the Islamic Republic of Pakistan, 1973 ("Constitution"). The Council consists of Prime Minister, as Chairman, the Chief Ministers of all the Provinces and three members nominated by the Prime Minister. The Council is answerable/responsible only to Majlis-e-Shoora (Parliament).
Under Article 154 of the Constitution, the Council has to formulate and regulate policies in relation to matters in Part-II of the Federal Legislative List and is required to exercise supervision and control over related institutions. OGRA, being one of the institutions, falls under Entry 2 of the Part-II.
In backdrop of this legal position, the Policy of 2016, being approved by CCI, has constitutional force. Any policy decision by CCI, if Federal or Provincial Government feels dissatisfied, can be undone only by Majlis-e-Shoora (Parliament) in a joint sitting of both Houses. The Ministry and OGDCL were bound to implement this policy right from the date of its issuance. However, necessary amendments in the Rules were brought on a direction by this Court, in earlier Writ Petition, and the prices are notified during proceedings in this case. Such an inaction on the part of public functionaries against a constitutional command necessarily requires interference by Superior Courts, in exercise of their constitutional jurisdiction, to protect the Constitution and its commands.
No direction is available to any public office holder, except to implement the policy, approved by CCI, promptly and in letter and spirit.
14. Under the circumstances, it is held that charging Signature Bonus needs to be regulated by OGRA, therefore, these petitions are transmitted to OGRA for necessary action.
15. The Federal Government is directed to ensure that stakeholders/consumers are represented in the Committee, constituted under the Policy of 2016, for fixation of prices. The needful shall be done within thirty days from receipt of this order. Compliance report shall be communicated by Secretary, Ministry of Energy (Petroleum Division) to Deputy Registrar (Judl.) of this Court within 45 days.
This and connected petitions are allowed in the manner and to the extent mentioned hereinabove.