SHC sets aside Ogra’s 2016 notification regarding fixing of gas price

The Sindh High Court (SHC) has set aside the Oil and Gas Regulatory Authority’s (Ogra) notification with regard to fixation of gas prices in December 2016 declaring it void.

The order came on several lawsuits filed by private companies challenging the authority of Ogra to fix the gas price.

The high court had framed issues to deal with the lawsuits to ascertain whether the impugned notification could have been issued without approval of the federal government under the section 8 of the Ogra Ordinance 2002, whether it could operate retrospectively from December 15, 2016, and whether Ogra could have issued the impugned notification while the position of an oil member was vacant.

The SHC also looked into whether the timeline provided in the Section 8(3) of the Ogra Ordinance 2002 was mandatory, and whether the imposition of gas development surcharge amounted to an imposition of tax in violation of the Article 73 of the Constitution.

The plaintiffs’ counsel submitted that the impugned notification was admittedly devoid of sanction by the federal government, upon the date when it was issued, and post facto ratification thereof was impermissible per the law.

They said that notwithstanding the same, no notification was issued by Ogra pursuant to the cabinet decision at any time since, therefore, the impugned notification be declared ultra vires of the ordinance and the rules.

A federal law officer submitted that the impugned notification was always endowed with the cabinet. The defendants’ counsel submitted that the impugned notification merited no interference as Mustafa Impex case did not apply to the pertinent circumstances.

It was stated that the edict pertained to exercise of executive power per the Articles 90, 97 and 99 of the Constitution, whereas, the present controversy pertained to exercise of functions according to the Articles 172(3) and 173.

A single bench of the SHC comprising Justice Agha Faisal after hearing the arguments of the counsel observed that admittedly, the defendant Sui Southern Gas Company had a contractual relationship with the federal government in which the company was guaranteed a certain rate of return.

The high court observed that periodical price review requests were predicated upon actualising the said return. The SHC observed that the defendants’ counsel made absolutely no effort to suggest that a subsequent price review request would be devoid of any previous shortfall, occasioned for any reason whatsoever.

The SHC observed that the issues framed for determination were hereby answered in the negative in favour of the plaintiffs and against the defendants.

The single bench declared that impugned notification issued by Ogra on December 30, 2016, as void ab initio. The high court observed that the operation of judgment shall remain suspended for a period of 30 days from the date hereof; hence, the securities furnished pursuant to interim orders shall remain intact for the said period.