Ayesha A. Malik J. This Petition has been filed under Section 12(2) of the Oil and Gas Regulatory Authority Ordinance, 2002 ("Ordinance 2002") read with Article 199 of the Constitution of Islamic Republic of Pakistan, 1973 ("Constitution") whereby the Petitioner , Sui Northern Gas Pipelines Limited ("SNGPL") has challenged decisions dated 15.01.2019, 27.02.2019 and 31.05.2019 (the Impugned Decisions) passed by the Respondent, Oil and Gas Regulatory Authority ("OGRA").
2. The basic grievance of the Petitioner is that OGRA has wrongfully decided that the Petitioner cannot recover Pressure Factor from domestic consumers. Further that the Petitioner is entitled to recover Pressure Factor from domestic consumers who are using gas in excess of 8 inches of water column pressure. The consumers are required to compensate SNGPL for the actual delivery of pressure availed by them. Learned counsel argued that the relationship between domestic consumers and SNGPL is governed by the Standard Domestic Gas Supply Contract ("Gas Contract") whose terms are approved and notified by OGRA after obtaining feedback from all stakeholders. Clause 11 of the Gas Contract clearly provides that natural gas shall be supplied at a pressure not exceeding 8 inches of water column above atmospheric pressure. The basic case of the Petitioner is that gas meters installed for domestic consumers only measure the volume of gas flowing through it and there is no inbuilt system to measure any changes in pressure. Consequently , if any domestic consumer consumes gas at a higher pressure than that allocated to it by the Petitioner , it will result in incorrect billing on account of misappropriation of gas, as the consumer does not pay for the quantity of gas it has actually consumed. To deal with this problem, the Petitioner executed a policy dated 30.10.2008 ("Pressure Factor Policy") regarding application of Pressure Factor to domestic consumers. The objective of the Pressure Factor Policy was to enable the Petitioner to rectify measurement errors so as to ensure that a consumer is billed for correct quantity of gas consumed. In terms of the Pressure Factor Policy , if a consumer is found using gas in excess of 8 inches water column pressure, then the Pressure Factor corresponding to the actual delivered pressure should be applied. Essentially the Pressure Factor Policy allows the Petitioner to ensure that any consumer receiving gas beyond the prescribed Pressure Factor will be liable to pay for the excess gas that it has consumed.
3. Learned counsel for SNGPL argued that the relationship between the domestic consumer and the Petitioner is covered by the Gas Contract the terms of which are approved and notified by OGRA. As per terms of the Gas Contract, the domestic consumer is to be supplied gas at a pressure not exceeding 8 inches of water column above atmospheric pressure. The volume of gas is recorded in cubic feet or cubic meters on the meter , which is converted to energy units i.e. million british thermal units (MMBTU) based on the average BTU per cubic foot (at absolute pressure of 14.65 pounds per square inch and a temperature of 60 degrees Fahrenheit) recorded on the calorimeters and/or gas chromatographs for the particular city/town, village or locality where the consumer is located. However , where consumer is found tampering with the meter , regulator , service pipe or other installations and has obtained gas at a higher press ure, such consumer is liable to pay the Petitioner gas charges which commensurate with the gas consumed. Learned counsel argued that in terms of Clause 11 read with Clause 19 of the Gas Contract, the Petitioner is entitled to recover charges for excess Pressure Factor in order to ensure and prevent gas misappropriation. Learned counsel further argued that although the Gas Contract stipulates that the Petitioner can terminate the contract and subsequently disconnect the supply of gas, yet the Petitioner did not resort to doing the same and instead has made efforts to recover amounts due to it. In this regard, he argued that the Petitioner conducted an extensive exercise of physical verification at the premises of consumers who were misappropriating the gas and billed them accordingly . He explained that Pressure Factor is charged in the bill to consumers against whom proper physical verification has been carried out. Learned counsel further argued that in this context, several letters have been issued by the Petitioner to the Respondent explaining its position with reference to misappropriation of gas and the necessity to charge Pressure Factor to domestic consumers. Learned counsel explained that although over all there has been a decline in gas reserves, usage of gas has increased at the same time and there has been a shortfall in power generation. Hence the overall environment has created an increased usage of gas and gas generators. All these factors are necessary , important and relevant when looking into the matter of Pressure Factor especially for winter season. Learned coun sel argued that the Impugned Decisions have failed to take these factors into consideration and has wrongfully , against the terms of the Gas Contract, denied the Petitioner amounts due for enhanced consumption of gas by unlawfully increasing Pressure Factor . Learned counsel clarified that Petitioner is under no obligation to supply gas at a pressure exceeding 8 inches water column. Where consumers through unauthorized means enhanced the pressure and have managed to extract more gas than they are entitled to, in such cases, the Petitioner is entitled to recover amounts for excess gas consumed. Therefore, the real question in issue before OGRA was the illegal means that domestic consumers have resorted to, in order to procure gas beyond what they are entitled to. Learn ed counsel also relied upon the Natural Gas Distribution Technical Standards Regulations, 2004 ("2004 Regulations") which is contrary to the terms of the Gas Contract. Hence the learned counsel argued that the Regulations will prevail over the Gas Contract and the higher limits prescribed by the Regulations can apply in this regard. Furthermore Learned counsel argued that Clause 19 of the Contract has been totally ignored; the Petitioner 's entitlement to recover charges for actual gas consumed by applying a proper Pressure Factor has also been ignored; reliance on Clause 11 of the Contract is misconceived and the decision of OGRA to refund all amounts collected under the head of Pressure Factor to consumers is totally based on a direction issued by the Federal Government and is not an independent reasoned direction of OGRA. Consequently , he argued that the Respondent has not discharged its functions in accordance with law .
4. On behalf of Respondent, report and parawise comments have been filed. Learned counsel argued that the matter in issue is with reference to the application of Pressure Factor across the board to all domestic consumers without carrying out a detailed physical verification of each and every consumer . She argued that the Respondent has relied upon Clause 19 of the Contr act which provides that if a consumer tampers with a meter , regulator , service pipe or other installations to secure more supply than is recorded on the meter or to obtain gas at a higher pressure than maintained by Petitioner , that consumer is liable to pay gas charges commensurating with the consumption of gas as ascertained by the Petitioner for the relevant period in accordance with company' s policy on theft of gas. She argued that in terms of this Clause, the Petitioner has to physically verify that a particular consumer has tampered with the gas installations and thereby consumed more gas or obtained gas at a higher pressure than that it is entitled to. States that in these cases, the Petitioner did not carry out any physical verification, rather it applied Pressure Factor to domestic consumers on the presumption that each and every domestic consumer has wrongfully obtained gas at a higher pressure than that it is entitled to. She argued that this fact is admitted in the correspondence that the Petitioner has made with the Resp ondent. States that matter was duly considered through the Impugned Decisions dated 15.01.2019 whereby the Respondent directed the Petitioner to re examine the application of correct Pressure Factor in the domestic consumers' gas bills and make any adjustment on this account to ensure that consumers who have tampered with gas installations are held liable for the same and not otherwise. The matter was again considered through the Impugned Decision dated 27.02.2019 whereby the Respondent once again directed the Petitioner to make reversal/adjustment to the affected consumers due to application of Pressure Factor above 8 inches of water column across the board for the period from July, 2018 to February , 2019. Since the adjustment claims were not found to be based on any physical verification, therefore, the Respondent directed the Petitioner to reverse all Pressur e Factor adjustments claimed in the bills and only demand the same where proper physical verification has been made. And finally , the matter was again considered in the Impugned Decis ion dated 31.05.2019 at great length wherein the Respondent observed that the Petitioner is neither complying with the directions of OGRA nor with the directions of Government of Pakistan with respect to refund of amounts that have been charged excessively by the Petitioner under the head of Pressure Factor . Learned counsel argued that in this regard, the Petitioner has itself formulated the Policy , yet they are unable to provide all the verification documents on the basis of which they have billed the domestic consumers for Pressure Factor . She stated that the Respondent has repeatedly been asked for the documents pertaining to physical verification but the same has not been provided. Hence, she stated that Impugned Decisions are in accordance with law and do not call for any interference by this Court.
5. Heard. Record perused. The Petitioner is aggrieved by the Impugned Decisions of OGRA on the basis of which it has been directed to refund all amounts charged to the domestic consumers in excess, under the head of Pressure Factor since July, 2018 to February , 2019. The basic contention of the Petitioner is that OGRA failed to take into consideration the fact that on account of an increased demand for gas, consumers have resorted to illegal means to enhance supply of gas through manipulation of the Pressure Factor for the purposes of increasing supply of gas.
In this context, the gas meters installed by Petitioner do not measure Pressure Factor rather only measure volume of gas consumed. Hence, it is difficult for the Petitioner to prevent misappropriation of gas by domestic consumers.
The entire controversy , as has been argued on behalf of Petitioner is based on the Gas Contract between the Petitioner and domestic consumers. The relevant Clauses of the Contract as relied upon by both the parties are reproduced hereunder:- Clause 11: Measurement Standard: Natural gas shall be supplied at a pressure not exceeding 8 inches of water column above atmospheric pressure. The volume of gas shall be recorded in cubic feet or cubic meters on the meter , which shall be converted to energy units i.e. Million British Thermal Units (MMBTU) based on the average BTU per cubic foot (at absolute pressure of 14.65 pounds per square inch and a temperature of 60 degrees Fahrenheit) recorded on the calorimeters and/or gas chromatographs for the partic ular city/town, village or locality where the consumer is located.
Clause 18: Contract T ermination on violation of terms of the Contract:
(I) This Contract shall be subject to cancellation by the Company at any time for any of the following causes:
(i) Neglect or default of the Consumer to pay the bills rendered by the Company for any month' s supply of gas or other dues payable by the Consumer within the period specified in Clause 12 hereof.
(ii) Any action by OGRA, Municipal Authorities, Improvement Trust, Local Bodies or any Government authorities or any legal proceeding against the Company by any party interfering with the Company' s right to supply gas or collect dues payable to the Company hereunder .
(iii) Any action by the Consumer to secure gas through his meter for purposes other than that mentioned hereinabove or for another party without written consent of the Company .
(iv) Any action by the Consumer tending to secure more gas than the meter regist ers or to secure gas through the said meter at a higher pressure than that at which the regulators are set by the Company or any interference by the Consumer with the meters or regulators tending to prevent the same from properly operating and correctly registering.
(v) V iolation of or default in compliance with any of the terms and conditions of this contract.
(vi) Any major alteration, addition, extension to the existing gas installation carried out by the Consumer without obtaining prior approval of the Company in writing.
(II) In case of termination of this Contrac t for any cause whatsoever , all claims for gas supplied and or services rendered by the Company upto the date of disconnection of gas supply shall become forthwith due and payable without notice from the Company and the Consumer shall pay the same on demand.
(III) This Contract shall stand cancelled if the person, premises and/or the purpose for which the gas is supplied under this Contract, have been transferre d or assigned in favour of any other person, body corporate or firm, with effect from the date of such transfer or assignment. The Company shall have the right to discontinue supply and to remove any or all of its property from the premises unless a fresh Contract is signed by the new owner/occupier of the premises or property in question. On the transfer/assignment of the premises the security deposit may be transferred by the Consumer and thereaft er the same will be held by the Company , as security deposit in favour of the new occupant, and execution of a notice to this effect shall be sufficient proof of such transfer , and the Consumer shall cease to have any right of action against the Company in respect of such security deposit.
Clause 19: Tampering of Gas Instal lations: If meter , regulator service pipe or other installations at the Consumers premises are found to have been tampered in any way in order to secure more supply for the Consumer than is recorded on the meter or to obtain gas at a higher pressure than maintained by the Company , the Consumer shall be liable to pay to the Company gas charges commensurate with the Consumer 's consumption of gas ascertained by the Company for this period in accordance with company' s policy on theft of gas, duly approved by OGRA.
6. The argument of the Petitioner is that Clause 11 of the Contract does not take into consideration the illegal modes adopted by domestic consumers to extract higher pressure of gas, beyond what it is entitled to.
Consequently where a consumer is found to be tampering with the Pressure Factor , the Petitioner can either terminate the Gas Contract under Clause 18(iv) and thereby disconnect the supply of gas or else it can be compensated, by charging the consumer for the excess amounts of gas consumed under Clause 19. On the basis of the record, it appears that this issue has been highlighted by the Petitioner several times before OGRA and as far back as 30.10.2008, a policy regarding application of Pressure Factor to domestic consumers was made in terms of which if a consumer is found to be using gas in excess of 8 inches of water column, consumer 's signatures may be obtained by a responsible Engineer/Supervisor on the inspec tion report and any amounts in excess of the entitled Pressure Factor would be charged with effect from the date of detection. As per the Pressure Factor Policy , no recovery can be made prior to the date of inspection. This Policy itself stipulates that there has to be a physical verification by a responsible Engineer/Supervisor who has to confirm that the consumer has been tampering with the gas installations for procuring higher pressure of gas. The bills appended with the instant Petition show that all domestic consumers have been billed for Pressure Factor . This fact is not denied by the Petitioner . The dispute between SNGPL and OGRA is whether the Petitioner can charge for Pressure Factor across the board, to all domestic consumers and whether physical verification of all consumers who were billed for Pressure Factor was carried out. The Petitioner 's contention is that it has carried out physical verification of all consumers and has billed them for Pressure Factor . This statement of the Petitioner is negated by its own correspondence appended with this Petition, on the basis of which Petitioner has repeatedly stated to OGRA that it has charged Pressure Factor to domestic consumers taking a lenient view against termination of the Gas Contract.
In the correspondence through letters No. RA-Pressure Factor-001-19 dated 25.01 .2019, RA-Pressure Factor-002- 19 dated 04.02.2019, RA-Pressure Factor-003-19 dated 15.02.2019 and RA-Pressure Factor-004- 19 dated 25.02.2019, the Petitioner has stated as follows:- i) Continuous surveillance of all domestic consumers on monthly (as in case of industrial consumers)/quarterly (as in case of commercial consumers)/annual basis is not possible with available resources and may not be a feasible economical option for the Petitioner . ii) Petitioner has billed all the domestic consumers across the board under the head of Pressure Factor and has been advertising Pressure Factor application to domestic consumers in print and electronic media. iii) On the basis of available resources, only one million domestic consumers can be inspected annually which will also take a considerable period of time and even if the Pressure Factor is charge d to those consumers who are tampering with the gas installations, Petitioner apprehends that those consumers will again resort to the illegal pressure enhancement to meet their gas load requirement.
7. On the basis of aforesaid, it is evident that the Petitioner has not physically verified each and every domestic consumer to conclude that they have tampered with the gas installations and manipulated the Pressure Factor .
Consequently , charging of Pressure Factor to every gas consumer is a presumptive exercise carried out by Petitioner which has been repeatedly considered by OGRA and rejected on account of there not being sufficient evidence to support its claim to charge Pressure Factor to all the domestic consumers. The record shows that OGRA through its letter No. OGRA 9-(432)/2016 dated 02.01.2019 required the Petitioner to provide proper evidence where it applies Pressure Facto r in terms of provisions of Clause 11 of the Contract. This letter clearly provides that incorrect application of Pressure Factor is resulting in escalated gas bills for the domestic consumers.
Hence specific evidence of tampering with the Pressure Factor was required to justify charging for Pressure Factor .
Again through letter No. OGRA 9-(432)/2 016 dated 11.02.2019, OGRA asked the Petitioner to provide data with respect to the additional volume being charged for the period July, 2018 to December , 2018. Although the Petitioner provided some data to OGRA vide letter No. RA-Pressure Factor-003-19 dated 15.02.2019 this data was in the form of Pressure Factor applicable in various different regions where its consumer base is available. The said letter contains the Petitioner 's explanation that continuous surveillance of about 6.5 million consumers is practically impossible and monitoring of each and every domestic consumer for Pressure Factor is economically not viable.
Hence region-wise data was provided which OGRA rejected and asked for specific details of the consumers who were liable to pay for the illegal modes applied for obtaining higher pressure than what they were entitled to under the Gas Contract. However , the Petitioner was unable to provide special data.
8. Therefore in terms of the aforesaid correspondence, it is clear that the Petitioner 's contention that physical verification of each and every consumer with reference to the Pressure Factor was carried out is incorrect. It is also clear on the basis of the Petitioner 's own admission that it has applied Pressure Factor across the board on all the domestic consumers which includes those consumers who have not manipulated the Pressure Factor nor caused any loss to the Petitioner . This practice was rightly rejected by OGRA through the Impugned Decisions on the ground that there cannot be a presumptive calculation with respect to Pressure Factor . If at all, a domestic consumer is made liable to pay for Pressure Factor , it has to be on the basis of physical verification and an inspection report which finds that the specific consumer has tampered with the gas installations and enhanced the Pressure Factor . This is as per the terms of the Gas Contract where, if the Petitioner is of the opinion that a domestic consumer has violated any provision of the Gas Contract, then liabilit y can be imposed only upon a consumer after a finding of fact that the said consumer has in fact tampered with the gas installations.
9. Although learned counsel for the Petitioner has at length tried to explain all the reasons available to the Petitioner on the basis of which it has justified its position to charge Pressure Facto r to all domestic consumers, the regulator being OGRA has considered the stated factors and concluded that the Petitioner cannot make presumptive charges to all domestic consumers, without verification as to whether or not any tampering with the gas installations has been made. The Impugned Decisions also show that the Petitioner was directed vide decision dated 15.01.2019 to re-examine the application of correct Pressure Factor in the domestic consumers' bills and make any adjustments on this account where necessary . The Petitioner did not comply with the orders and again vide the impugned decision dated 27.02.2019, the matter was considered and the Petitioner was once again directed to verify the imposition of Pressure Factor in the bills of all domestic consu mers and to refund/adjust all the amounts to those consumers who were not liable to pay Pressure Factor . The Petitioner once again disputed this decision by issuing letters of explanation and by way of making a presentation before OGRA and filing a Review of the Estimated Revenue Requirement (RERR) for the Financial Year 2018-2019. However once again OGRA concluded that Petitioner cannot charge Pressure Factor above 8 inches of water column which is its contractual obligation and any consumer who is receiving a higher pressure, firstly has to be made liable for receiving a higher pressure in terms of Pressure Factor Policy and secondly there has to be a physical verification for the same on the basis of which there will be a finding of fact that such domestic consumer has tampered with the gas installations and has consumed gas at a higher pressure than that it was entitled to. Finally the consumer can be billed as per excessive consumption based on proper verification. So far as management issues, economic considerations and resources availability is concerned, in the decision dated 31.05.2019, the Petitioner has been advised by OGRA to take necessary measures for the resolut ion of these issues and consider revising its contract to cater for such consumers who are repeatedly tampering with the gas installations in order to prevent any further bottlenecks of its distribution network. The Petitioner has also been told that this is an operational issue for SNGPL, which it should rectify , but it cannot unnecessarily inflate the bills of all domestic consumers. Consequently , the Petitioner 's contentions and justifications for charging all domestic consumers Pressure Facto r were totally rejected for being not in compliance with the contractual understanding.
10. Even subsequent to decision dated 31.05.2019, the Petitioner has issued its comments on this determination and once again tried to justify the reasons and its inability for compliance of the orders of OGRA. In this regard, it is noted that the Petitioner has impugned three decisions of OGRA before this Court under Section 12(2) of the Ordinance 2002. The matter has been looked into at great length and no illegality or irregularity has been found in the impugned decisions of OGRA. There fore, SNGPL does not have any option but to comply with the orders of OGRA as OGRA is the front line regulator of SNGPL and has given clear directions which require compliance. In terms of the preamble of the Ordinance 2002, OGRA is mandated to protect the public interest while respecting individual rights. In this case, OGRA has repeatedly required the Petitioner to honour the terms of its contracts with domestic consumers and to bill only those consumers who have tampered with the gas installations to obtain higher Pressure Factor and not to make presumptive billing with reference to Pressure Factor to all the domestic consumers. On the face of it, the stance of the Petitioner that it is entitled to charge all domestic consumers with Pressure Factor on account of enhanc ed demand for gas and enhanced use of illegal modes to fulfill gas requirements does not justify charging all domestic consumers with Pressure Factor as those consumers who are not involved in any tampering with gas installations cannot be made liable to pay compensation for excessive use of gas as per the terms of the Gas Contra ct. Even otherwise, the Petitioner cannot devise its own reasons for billing all domestic consumers for an illegality which has not been established. As per the Petitioner 's own Policy and terms of the Gas Contract the liability to pay for Pressure Factor is for those domestic consumers who have tampered with the gas installations and the Petitioner does not have any data to support its contention that all domestic consumers have undergone physical verification. Hence its charging of Pressure Factor is illegal.
11. In view of the aforesaid, no case for interference by this Court is made out. This Petition being meritless stands dismissed.