The Sindh High Court (SHC) has declared the Oil and Gas Regulatory Authority’s (Ogra) gas price notification from December 2016 as null and void. This decision comes after a series of lawsuits filed by private companies questioning Ogra’s authority to set gas prices.
The court examined several key issues in these lawsuits. It assessed whether Ogra had the legal right to issue the notification without federal government approval under Section 8 of the Ogra Ordinance 2002. The court also considered if the notification could be applied retroactively from December 15, 2016, and whether Ogra acted properly despite having a vacant oil member position at the time.
Additionally, the court reviewed if the timeline specified in Section 8(3) of the Ogra Ordinance 2002 was mandatory and whether the gas development surcharge constituted a tax violation under Article 73 of the Constitution.
The plaintiffs argued that the notification lacked federal government approval when it was issued, and any subsequent ratification was legally unacceptable. They pointed out that no new notification had been issued by Ogra following a cabinet decision, making the original notification invalid according to the ordinance and rules.
On the other hand, a federal law officer claimed that the notification had been approved by the cabinet. The defendants’ counsel argued that the notification did not warrant interference, distinguishing the case from the Mustafa Impex case, which they claimed was irrelevant to the current circumstances. They asserted that the matter involved executive powers under Articles 90, 97, and 99 of the Constitution, rather than the specific provisions of Articles 172(3) and 173.
Justice Agha Faisal, presiding over the case, noted that Sui Southern Gas Company had a contractual agreement with the federal government, guaranteeing a certain rate of return. The court observed that the price review requests were based on ensuring this return. It found that the defendants’ counsel did not address whether future price reviews would account for any previous shortfalls.
The SHC concluded that the issues were resolved in favor of the plaintiffs. Consequently, the court declared Ogra’s December 30, 2016, notification as void from the beginning. The court’s ruling will be suspended for 30 days from the date of the decision, during which time the securities provided under interim orders will remain in effect.