Govt asks Ogra not to hike gas rates

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ISLAMABAD: In a move that may lead to a tricky legal situation for the regulator, the petroleum and natural resources ministry on Monday asked the Oil and Gas Regulatory Authority (Ogra) not to invoke a binding law to notify an increase in gas prices.

“The Ministry of Petroleum and Natural Resources is informing Ogra to maintain gas prices at the existing level,” a brief statement issued by the ministry said and added: “Prices will remain the same for all categories of consumers.”

An Ogra official said the letter requesting the regulator to put on hold invoking section 8(4) of the Ogra Ordinance had been received. The law binds the regulator to notify the determined consumer prices if the government fails to issue an advice within a mandatory 40-day period.

The petroleum ministry had informed Ogra that it was still working on the matter, the official said.

According to sources, the letter has put Ogra into a difficult legal situation. Under the Ogra Ordinance, there was a mechanism for the government to issue policy guidelines and the ministry’s request did not meet the legal requirement, they said.

The guidelines mean “policies of the federal government covering or related to any or all the regulated activities which are issued in writing pursuant to a decision of the cabinet of the federal government or any committee thereof”.

The ministry’s letter, prima facie, was not based on a decision of the federal cabinet or its Economic Coordination Committee and there was no reference in or attachment with the letter to suggest so, the official said.

On top of that the Supreme Court recently held that even the prime minister did not have the power to take decisions on financial or budgetary matters without consulting the cabinet. The position of the petroleum ministry is much lower in financial powers than the prime minister.

The sources said that Ogra was planning to hold an emergency meeting on Tuesday and decide on the basis of legal advice if it could face the Islamabad High Court where the petroleum ministry had absolved the government of any responsibility regarding gas prices and put the entire burden on the regulator.

Private shareholders of the gas utilities had challenged a freeze on gas prices imposed by the PML-N government for almost three years even though the law required biannual revisions on the basis of revenue requirements determined by Ogra.

The regulator had last week warned the government of its legal compulsion to notify an across-the-board increase of 12 per cent in the natural gas tariff for all consumers on Nov 15 on the basis of its Oct 6 determination of revenue requirements of the Sui Southern Gas Company and Sui Northern Gas Pipelines Limited for the financial year 2016-17.