Ayesha A. Malik J. This common judgment decides upon the issues raised in the instant Petition along with connected Petitions, as detailed in Schedule "A" appended with the judgment, as all the Petitions raise common questions of law and facts. Through these Petitions, the Petitioners challenge the decision dated 6.7.2020 in Review proceedings passed by Oil and Gas Regulatory Authority ("OGRA") and Notification dated 31.8.2015 issued by OGRA being without jurisdiction and in violation of the Oil and Gas Regulatory Authority Ordinance, 2002 ("Ordinance") and Natural Gas Tariff Rules, 2002 ("Rules") .
2. For the purposes of payment of arrear s of gas tariff, the period in dispute is from 31.8.2015 to 30.12.2016 and the sector is general industry . The Petitioners are industrial concerns who have challenged the liability created for arrears of gas tariff on the basis of Notification dated 31.8.2015 for being against the mandate of the OGRA Ordinance and the Rules. The issue is whether the Petitioners are liable to pay arrears of gas tariff for the disputed period as determined by OGRA vide its decision dated 3.7.2014 at the rate of Rs.464.94 MMBTU or as per the impugned Notification at the rate of Rs.600 MMBTU.
3. The undisputed facts of the case are that the Respondent SNGPL filed its application for determination of its revenue requirements for the financial year 2014-15 before OGRA on 13.12.2013. A decision was rendered under Section 8(1) of the Ordinance on 3.7.2014 wherein the provisional tariff prescribed by OGRA for the financial year 2014-15 with effect from 1.7.2014 was Rs.464.94 MMBTU for general industry . OGRA sent this provisional price to the Federal Government in terms of Section 8(3) of the Ordinance for its advice. The Federal Government was required to render its advice within 40 days, however it failed to render its advice within the given time. Instead the advice was sent after a delay of 14 months whereafter the impugned Notification dated 31.8.2015 was issued and the sale price was notified at the rate of Rs.600 MMBTU.
4. The Petitioners' contention as narrated by the learned counsel is that Section 8(3) of the Ordinance clearly defines what is to happen in the event that the Federal Government fails to advise the Authority within the prescribed 40 days' time. In such eventuality , it is the Authority which has to notify the sale price, as determined by it as per Section 8(1) and (2) in the official gazette. Therefore the case of the Petitioners' is that if the Federal Government fails to advise OGRA under Section 8 (3) of the Ordinance then OGRA notifies the price under Section 8(4) which is the relevant price due from the consumer for the disputed period. In these cases, the Petitioners' stance that they are liable to pay at the rate prescribed in the decision dated 3.7.2014 being Rs.464.94 MMBTU.
Learned counsel further argued that the Petitioners have been made liable to pay arrears on account of the differential of Rs.464.94 MMBTU and Rs.600 MMBTU. Furthermore the Petitioners base their contentions on the judgment of the Hon'ble Sindh High Court dated 6.5.2016 passed in Suit No.1978/2015 titled Pakistan Beverage (Pvt.) Ltd. v . Federation of Pakistan and others wherein the impugned Notification was set aside.
5. Report and parawise comments have been filed by Respondent OGRA. In terms thereof, learned counsel argued that the sale price has been fixed in accordance with the requirements of the Ordinance as well as the Rules; that OGRA under the applicable legal framework determines the revenue requirements of gas under Section 8(1) and (2) of the Ordinance. The Feder al Government under Section 8(3) issues its advice for the sale price for each category of retail consumer of natural gas. The advice of the Federal Gover nment is binding on OGRA and the answering Respondents on the basis of the advice rendered, issued the impugned Notification on 31.8.2015.
This price was made effective from 1.9.2015, meaning thereby that the Petitioners were liable to pay the tariff for gas at the rate of Rs.600 MMBTU from 1.9.2015. It is argued that the Petitioners from the date of determination dated 3.7.2014 till the issuance of the Notification of 31.8.2015 paid tariff at the rate of Rs.488.23 MMBTU as per Notification dated 1.1.2013. However on account of the advice of the Federal Government with effect from 1.9.2015 till the issuance of the next Notification for the next financial year being 2015-16 which came in December 2016, they are required to pay tariff at the rate of Rs.600 MMBTU. Learned counsel argued that the Authority has acted in accordance with law as per the advice of the Federal Government. She further argued that the sale price of 31.8.2015 is consistent with OGRA 's determination dated 3.7.2014 as the price fixed on 3.7.2014 was the provisional price which had to be finalized on actual cost. This was done on 27.11.2015 when the final price fixed at the rate of Rs.528.19 MMBTU being higher than the price paid by the Petitioners. Hence even though there was a delay , the cost was kept in mind and consequent thereof Notification dated 31.8.2015 was issued. She also argued that against this Notification, the Petitioners had remedy of appeal under Section 12 of the Ordinance and review under Section 13 of the Ordinance. However , instead the Petitioners filed writ petitions which were then converted into reviews vide the orders of this Cour t before OGRA which ultimately decided the matter vide the impugned decision. This practice continued in several cases which were treated as reviews and decided by OGRA.
Consequently OGRA in the review petitions decided that the Notification dated 31.8.2015 will be effective from 1.9.2015, hence the outstanding amount statedly recoverable from the Petitioners is Rs.1.2 billion, which has to be paid. Hence she prays for dismissal of the petitions.
6. Report and parawise comments have also been filed on behalf of Respondent SNGPL. Learned counsel argued that there is no penal provision under the Ordinance in the event that the Federa l Government does not issue a notification within the required 40 days; that non-advice from the Federal Government as required under Section 8(3) read with Rule 18(2) of the Rules does not render the impugned Notification dated 31.8.2015 as illegal.
Learned counsel argued that as per Section 8(4) of the Ordinance in the event of failure of the Federal Government to render its advice within the stipulated 40 days, OGRA is empowered to notify the price. However it did not issue any notification until 31.8.2015. Learned counsel further argued that the provisions of the Ordinance in Section 8 are directory; that OGRA has no control over the actions of the Federal Governme nt and that at the given time the tariff was fixed as per the requirement for the financial year 2014-15. Furthermore the tariff of Rs.600 MMBTU has never been challenged for the subsequen t years, hence the instant challenge is hit by laches. He also stated that the Petitioners did not challenge the notified sale price as per law and instated filed petitions before this Court and obtained stay orders so as to stop makin g payments which they were obligated to pay. Hence these petitions are liable to be dismissed being devoid of any merit.
7. Heard. The basic dispute is with reference to Section 8 of the Ordinance and Rule 18 of the Rules which are reproduced as under: Section 8 of the Ordinance
8. Pricing for retail consumers for natural gas. (1) The Authority shall determine an estim ate of the total revenue requirement of each licensee for natural 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 spec ified 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 presc ribed price as determined by the Authority under sub-sections (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 (XXXl 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 license for natural gas;
(e) "minimum charges" means the amoun t 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 consum ers 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.
Rule 18 of the Rules
18. Pricing for retail consumers for natural gas -- (1) As soon as may be but no 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 no 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.
As per provisions of the Ordinance and the Rules, OGRA makes a determination of the estimated revenue required by a licensee for natural gas and issue s the prescribed price for each licensee for a given fiscal year. The prescribed price is the amount determined which represents the amount a licensee is entitled to receive from each category of its retail consumer of natural gas in order to achieve its total revenue requirements. OGRA is then required, not later than three days of each determination, to seek advice from the Federal Government with reference to the sale price for each categ ory of retail consumer of natural gas. The sale price is the price notified under Section 8 which a licensee for natural gas is entitled to recover against each category of retail consumer .
Hence important to note is that OGRA issues the prescribed price while the Federal Government notifies the sale price . In the event of failure of the Government to advise the Authority within the stipulated time and the prescribed price for each category of retail consumer is higher than the most recently notified sale price for that category , then OGRA is required to notify the prescribed price as determined by the Authority under Section 8(1)(2) of the Ordinance to be the sale price for the said category . Meaning thereby that if the Federal Government fails to render its advice, then OGRA has to make a determination whether the prescribed price from the previous notification is the same or whether the prescribed price has gone up. In the event that the prescribed price has gone up, OGRA is required to notify that price to be the sale price. Hence Section 8 casts an obligatio n on the Federal Government to issue its advice within 40 days on the sale price and it also casts an obligation on OGRA to make a determination and issue a notification where the Federal Government does not issue its advice in 40 days. Section 8 in itself is a comprehensive provision. All provisions being mandatory ensure that the process of notifying the tariff and ensuring that the licensee of natural gas receives its revenue requirements is maintained.
8. In these cases essentially a dispute has arisen on the understanding of Section 8(4) of the Ordinance. Although the Petitioners have relied on the judgment of the Hon'ble Sindh High Court at Karachi where the notification of 31.8.2015 was set aside. Certain aspects of Section 8, namely the obligation of OGRA under Section 8 and the distinction between the prescribed price and the sale price was not considered in the judgment of the Hon'ble Sindh High Court. As per the said judgment, the Notification of 31.8.2015 was based on the delayed advice of the Federal Government and although the advice was placed before the Court, it was not accepted for being technical in nature issued by some third party and not by the Federal Government. Hence the case was decided in favour of the consumers and the Notification dated 31.8.2015 was set aside.
9. This gave rise to litigation as the Petitioners who originally did not challenge the Notification of 31.8.2015 nor did they challenge the prescribed price issue d by OGRA on 3.7.2014 or the final prescribed price for the fiscal year 2014-15 issued by OGRA on 27.11.2015 filed petitions to challenge the Notification of 31.8.2015. It is important to note that the provisional revenue requirement for the year 2014-15 was decided on 3.7.2014. Thereafter a final determination was made on 27.11.2015 which increased the tariff from Rs.464.94 MMBTU to Rs.528.19 MMBTU.
Against this final determination, the Respondent SNGPL filed a review which was disposed of on 26.10.2016.
Importantly the Petitioners did not challenge the final determination and did not challenge the review determinations for the year 2014-15. The Petitioners therefore did not avail the remedy available under the Ordinance in the form of an appeal and review , which is presumed that they had no objection to the final determination of Rs.528.19 MMBTU. It is only after the decision of the Hon'ble Sindh High Court in Suit No.1978/2015 dated 6.5.2016 that the Petitioners filed writ petitions praying therei n that the impugned Notification dated 31.8.2015 is against the mandate of the law. Throughout this period the Petitioners were paying gas tariff as notified on 1.1.2013 being Rs.488.23 MMBTU.
10. So far as the revenue requirements for the fiscal year 2014-15 are concerned, they were finalized as of 27.11.2015 and any increase in the sale price of the tariff vide the impugned Notification was based on the advice of the Federal Government. In this regard, it is noted that even though the Fede ral Government was required to issue its advice against the provisional determination and the revenue requirements for the fiscal year 2014-15 within 40 days of having received the revenue requirements determined on 3.7.2014, OGRA continued to charge tariff at the rate of Rs.488.23 MMBTU until 31.8.2015 which then notified the sale price. So until 31.8.2015 admittedly no grievance is made out against the amount that the Petitioners are liable to pay. The Notification of 31.8.2015 was made effective from 1.9.2015 which the Petitioners are required to pay until the issuance of the next Notification dated 30.12.2016 for which the tariff was at Rs.600 MMBTU being the notified sale price. Hence the dispute is limited for the period from 1.9.2014 to 31.8.2015 and the question is what price are the Petitioners liable to pay as the sale price for the gas tarif f for the disputed period.
11. Gas tariff is determined under Section 8 of the Ordinance. The Petitioners want to pay the prescribed price of Rs.464.94 as decided on 3.7.2014. However this amount only reflects the prescribed price as determined by OGRA. The Petitioners have to pay the sale price as notified under Section 8 of the Ordinance. Section 8(4) requires OGRA to notify a sale price where the Federal Government does not issue its advice on time. As per the section OGRA shall notify the prescribed price as the sale price, where the prescrib ed price is higher than the most recently notified sale price. In these cases, the prescribed price was Rs.464.94 MMBTU and the most recent sale price was Rs.488.23 MMBTU which means that as per Section 8(4) of the Ordina nce, since the prescribed price was less than the notified sale price, OGRA did not issue any notification and the Petitioners continued to pay Rs.488.23 MMBTU. During this period the revenue requirements for the year 2014 -15 was finalized on 27.11.2015 at Rs.528.19 MMBTU, which became the baseline for the estimated revenue requirements for the next fiscal year being 2015-16. The Petitioners did not object to this baseline. On 30.12.2016 the notified sale price was Rs.600 MMBTU for the industrial sector and it remained the same in 2017 as well. The Petitioners did not agitate against the notified sale price. This aspect of the matter is important because tariff is determined first on the basis of estimated revenue requirements and then on actual costs. The Federal Governme nt also plays a role as it makes an effort to balance all socio-economic factors and ensure that there is uniform sale price throughout the country .
Hence the advice of the Federal Government is mandatory so far as Section 8 of the Ordinance is concerned because a sale price is required. OGRA has placed on file and the Federal Govern ment does not dispute the same that several reminders were issued by OGRA that the Federal Government follows the 40 day requirement and issue its advice. Since they failed to issue the advice, the notified sale price from 2013 continued. The problem which arises in reading Section 8(3) and (4) is that if the Federal Government fails to render its advice in 40 days there is no sale price for each category of retail consumer for natural gas for that relevant fiscal year. OGRA can only issue the prescribed price under Section 8 of the Ordinance for any category of retail consumer and it is that prescribed price which can become the sale price, if it is higher . So while the 40 days requirement is mandatory , the issuance of a notified sale price is also necessary . Section 8(4) states that OGRA can notify the prescribed price to be the sale price for this period. However , OGRA also did not issue any notification under Section 8(4) of the Ordinance.
12. The question is whether the Petitioners get the benefit of the default of the Federal Government and OGRA. To my mind, the Petitioners do not get this benefit on account of the fact that the Petitioners did not challenge the prescribed price issued by OGRA on 3.7.2014 and the final price issued by OGRA on 27.11.2014 for the fiscal year 2014-15 and the notified sale price on 30.12.2016. After a considerable delay , the Petitioners filed writ petitions before the Lahore High Court, Multan Bench and originally obtained interim orders, restraining them from paying the notified price as per the Notification dated 31.8.2015 and then sought a direction to treat their petitions as reviews before OGRA for the purposes of the notified sale price in the impugned Notification dated 31.8.2015. This fact is relevant because until the filing of the writ petitions, the Petitioners continued to pay at the notified rate of Rs.600 MMBTU as per Notification dated 31.8.2015 and there is no objection against doing so. After the decision of the Hon'ble Sindh High Court at Karachi on 6.5.2016, they challenged the Notification and stopped making payments. They then appeared before OGRA in the form of a review which remed y they never availed during the time it was available to them. Nonetheless they were heard and as their contentions were not made out, the reviews were dismissed. Now although the Federal Government and OGRA should have been compliant with Section 8 of the Ordinance, it is important to note that the entire purpose of Sectio n 8 is to ensure that the tariff is determined and notified in a timely manner for the benefit of all concerned. The Petitioners have no right to decide what the tariff should be for any particular fiscal year on the basis of which they can file constitutional petitions.
Tariff determination is a lengthy process which requires many factors to be considered. If at all they were aggrieved during the process of determination of the prescribed price, remedy was available to them under the Ordinance.
13. The Petitioners are aggrieved becaus e they are required to pay arrears of the tariff for the period they obtained restraining orders from the Court. The Petitioners want to pay at the rate of Rs.464.94 MMBTU as opposed to the notified rate of Rs.600 MMBTU. In this regard, the Petitioners were unable to explain why they should be required to pay at the rate of Rs.464.94 MMBTU when they were paying at the rate of Rs.488.23 MMBTU as notified on 1.1.2013. Furthermore the final tariff for the year 2014-15 was Rs.528.19 MMBTU as determined by OGRA. Hence there is no logic in seeking to pay Rs.464.94 MMBTU. The very basis of the Petitioners' contention is neither reasonable nor as per the mandate of the Ordinance. Furthermore the Petitioners continued to pay as per Notification dated 31.8.2015 (impugned Notification) at the rate of Rs.600 MMBTU and as per Notification dated 30.12.2016 at the rate of Rs.600 MMBTU until the change in the sale price vide Notification dated 4.10.2018 came into force which rose to Rs.780 per MMBTU. Hence the record shows that from the date of the impugned Notification dated 31.8.2015 the Petitioners paid at the rate of Rs.600 MMBTU and maintained this price until the notification of 4.10.2018 when the sale price went up. Therefore, the Petitioners cannot justify seeking to pay the prescribed price of Rs.464.94 MMBTU which in fact was never the notified sale price. As per Section 8 of the Ordinance, the retail consumer of natural gas has to pay the sale price as notified by the Federal Government or in exceptional circumstances by OGRA.
14. In this regard, although it has been directed that the provisions of Section 8 of the Ordinance are mandatory and should be complied with, both the Federal Government and OGRA have narrated their short-comings for this time in which they were unable to comply with the requirements of Section 8. Since the determination of the prescribed price and notification of the sale price is on-going matter , setting aside the sale price of Rs.600 MMBTU would in fact give the Petitioners a benefit they were otherwise not entitled to.
15. In view of the aforesaid, no case for interference is made out. All the Petitions are dismissed .