Supreme Court declares linkage of CNG price with petrol illegal

Declaring linkage of CNG (Compressed Natural Gas) prices with those of other petroleum products illegal, the Supreme Court of Pakistan on Thursday issued an interim order in a case about weekly review of gas prices.

A two-member bench of the apex court headed by Chief Justice Iftikhar Muhammad Chaudhary ruled that the court said that CNG didn’t lie under the category of petroleum.

The bench also directed the Oil and Gas Regulatory Authority (OGRA) to revise the price of CNG on November 1.

The court declared that the profit of Rs 10 per kilogram on the price CNG and the linkage of CNG price with that of petrol were illegal.

During the proceedings, Petroleum and Natural Resources Secretary Waqar Masood told the court that the weekly pricing mechanism for petroleum products had been suspended until the Economic Coordination Committee (ECC) of the cabinet had given its decision.

In his remarks, Chief Justice Iftikhar said that CNG stations earned a per kilo profit of Rs 11.91, adding that, the price of CNG should not be linked with that of petrol and that the 50 per cent profit margin on CNG was strangulating the consumers.

Moreover, Oil and Gas Regulatory Authority (OGRA) Chairman Saeed Ahmed Khan submitted a report on the details of petrol and CNG pricing.

He submitted that the gas price for consumers could be determined biannually, upon which the chief justice queried how the authority would compensate the consumers for the weekly rise in tariff paid so far.

After reviewing the report, Chief Justice Iftikhar remarked that overcharging for CNG was tantamount to exploitation of consumers.

According to the OGRA report, the government’s procurement cost of CNG in Region 1 was Rs 19 per kilogram whereas the per kilogram price of CNG in Region 2 was Rs 17.57 and that the government decided on the price after including development surcharges.

The chief justice moreover inquired as to why the government was charging an exorbitant amount on the pretext of operating costs and said that exploitation of consumers would not be allowed.

Earlier, it was claimed that the increase in CNG prices under a weekly mechanism is in violation of the Oil and Gas Regulatory Authority (Ogra) Ordinance, 2002, it has been claimed.

Later, OGRA declared to bring back CNG price to the July 1 level.

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Posted by Faisal Farooq on Oct 26 2012. Filed under Latest News, National, Pakistan. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.