Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.
IN THE ISLAMABAD HIGH COURT, ISLAMABAD 
(Constitutional Jurisdiction) 
Writ Petition No.__________/2014 
Syed Kamran Ali S...
3. Government Holding (Pvt) Limited through its Managing Director 
having registered office at House No.17, Street No.89, ...
Agreement in 2009. The Petitioner was also a member of TAPI 
Technical Working Group which negotiated the Turkmenistan- 
A...
review of the executive actions in order to ensure conformity of 
the same to the Constitution and law. 
6. That the Respo...
8. That the Respondent No.3 holds more than ninety nine percent 
shareholding of Respondent No.2 and the Managing Director...
of Respondent No.1 and 3. The following agreements under this 
project have already been signed: 
i. Intergovernmental Agr...
among the Buyers. All the Buyers shall have to pay for the value 
of gas allocated to them through Gas Allocation Schedule...
delivery and on the Buyer for gas acceptance) in all 
situations other than (ii) & (iii) below; and 
ii. Buyer’s mutual ag...
Petitioner’s name from Management Email-Group, withholding 
the promotion of the Petitioner, initiating false enquiry agai...
21. That the following are core flaws of the Operations Agreement in 
general and Gas Allocation Schedule in particular: 
...
iv. In the Definition of “DP buyers’ Delivered Volume” two 
different terms “determined” and “Specified” have been 
used f...
ix. Under Clause 4, the Short Take Allocation Scenario is 
discussed. Under Clause 4.1 if on any day a short take has 
occ...
signing of Transporter’s Deed of Adherence) and necessary 
obligations are not put on the Gas Transporter with 
reference ...
point meter and gas pack variations (gas shrinkage as defined in 
the code). Section-E & L of the Gas Network code Code is...
incorporated in the “Access Arrangements” based on entry-exit 
meter readings, line pack imbalance and nominations. Attach...
c. Under Article 97 of the Constitution, the Respondent No.1 has 
been entrusted with executive authority of the Federatio...
ensures economic well being of the citizens of Pakistan. 
However, due to actions and inaction of the Respondents, huge 
a...
matter and ensure that in the Operations Agreement a correct & fair 
mechanism for allocation of gas is adopted. 
Further,...
F-8/4, Islamabad 
Phone: 051-285-4458 & 59 
Fax: 051-2854460 
Email: info@kazmiz.com
Upcoming SlideShare
Loading in …5
×

Writ Petition Islamabad High Court TAPI Operations Agreement

2,052 views

Published on

There are loop holes in the manner TAPI Project is currently being handled. The writer was a member of TAPI TWG group during 2010 and 2011 and tried to keep the project on Track by sharing the knowledge with less informed members. However things do not always go the way they are planned. Currently the writer has objected on the contents of TAPI Operations Agreement and the case is pending in Islamabad High Court. The decision of Islamabad High Court will be uploaded as and when available.

Published in: Economy & Finance
  • Be the first to comment

  • Be the first to like this

Writ Petition Islamabad High Court TAPI Operations Agreement

  1. 1. IN THE ISLAMABAD HIGH COURT, ISLAMABAD (Constitutional Jurisdiction) Writ Petition No.__________/2014 Syed Kamran Ali S/o Syed Mumtaz Ali, Deputy General Manager (Technical) Interstate Gas Systems (Pvt) Limited R/o 128 C-1 NESPAK Colony, Near Township, Lahore. … … …Petitioner Versus 1. Federation of Pakistan through Secretary Ministry of Petroleum & Natural Resources, Pak Secretariat, Islamabad. 2. Inter State Gas Systems (Pvt) Limited through its Managing Director having its registered office at 517, Main Margalla Road, F- 10/2, Islamabad.
  2. 2. 3. Government Holding (Pvt) Limited through its Managing Director having registered office at House No.17, Street No.89, G-6/3, Islamabad. … … …Respondents ___________________ WRIT PETITION UNDER ARTICLE 199 OF THE CONSTITUTION OF ISLAMIC REPUBLIC OF PAKISTAN, 1973 ____________________ Respectfully Sheweth: 1. That the addresses of parties provided in the heading of the Petition are sufficient for service of process of this honorable Court. 2. That the Petitioner is a Mechanical Engineer by profession with MBA-Finance and has been working in the field of energy particularly natural gas for last 20 years. The experience includes Gas Transmission Pipeline Operation, Gas Metering, Gas Custody Transfer Applications (Invoices & Electronic Flow Measurement), Gas Transportation Agreement, Gas Sales Purchase Agreements, Gas Operations Agreement and project executions including feasibility and design. Currently, the Petitioner is working in the Inter State Gas Systems (Pvt) Limited the Respondent No.2 as Deputy General Manager (Technical). 3. That the Petitioner was actively involved in finalization of Iran- Pakistan Gas Sales Purchase Agreement which was signed in 2009, negotiated and initialed Iran-Pakistan Gas Operations
  3. 3. Agreement in 2009. The Petitioner was also a member of TAPI Technical Working Group which negotiated the Turkmenistan- Afghanistan-Pakistan-India Gas Sales Purchase Agreement and Operations Agreement during 2010-11. Copy of the relevant letters whereby the Petitioner was included in the TAPI Technical Working Group is attached as “Annex-A”. 4. That the instant Petition is being filed in public interest as due to actions and inactions of the Respondents, the fundamental rights of the people of Pakistan are at stake. The honorable Supreme Court has ruled in various judgments that the Government officials are custodian of the public assets and therefore, cannot deal with the same except in accordance with law. 5. That the honorable Supreme Court of Pakistan has declared the Chagai Hills Joint Venture Agreement (related to Gold Mines in Balochistan) illegal and void ab initio in the judgment reported as PLD 2013 SC 641. Further, the privatization of the Steel Mills was declared to be illegal in the judgment reported as PLD 2006 SC 697. Recently in a case reported as PLD 2014 SC 206, the awarding of a project for extraction of LPG to Jamshoro Joint Venture Limited was declared illegal due to lack of transparency. Thus it is crystal clear that when there is lack of transparency on part of the Government officials in a transaction wherein public assets are involved then the Courts can intervene and protect the same. Even otherwise, this honorable Court has ample powers under Article 199 of the Constitution to have judicial
  4. 4. review of the executive actions in order to ensure conformity of the same to the Constitution and law. 6. That the Respondent No.1 is a Federal Ministry which is responsible to regulate and monitor the Oil & Gas Sector in Pakistan. Further, under Schedule IV Part II Entry 2 of the Constitution, the matters related to mineral oil and natural gas exclusively falls under the legislative domain of Parliament. Under Article 97 of the Constitution, the Federation has executive authority to all such matters which fall under the federal legislative list. Hence, the Federation has exclusive executive authority to deal with matters related to natural gas including import of natural gas from other countries in to Pakistan. 7. That the Respondent No.2 is a subsidiary of the Respondent No.3 Government Holdings (Pvt.) Limited which in turn is wholly owned by the Federation of Pakistan and operates under the supervision of the Ministry of Petroleum and Natural Resources. The Respondent No.2 was incorporated considering the future plans of the Government for importing natural gas from other countries. Further, the Secretary of the Ministry of Petroleum and Natural Resources is the Chairman of the Board of Directors of the Respondent No.2. Copy of the profile of Respondent No.2 is attached as “Annex-B”. Copy of the list of the members of the Board of Directors of Respondent No.2 is attached as “Annex-C”.
  5. 5. 8. That the Respondent No.3 holds more than ninety nine percent shareholding of Respondent No.2 and the Managing Director of the Respondent No.3 is the Chairman of the Finance Committee of Board of Directors of Respondent No.2. Copy of the profile of the Respondent No.3 is attached as “Annex-D”. 9. That the Rules of Business, 1973 explain in detail the extent of the authority of Ministry of Petroleum & Natural Resources with respect to matters related to the Oil & Gas field. Under Schedule II Paragraph No.23(4)(ii), the Respondent No.1, inter alia, is responsible for the investments made by the Government and also for companies owned by the Government in the field of oil and gas, it reads as under: (ii) Matters relating to Federal investments and undertakings wholly or partly owned by the Government in the field of oil, gas and minerals, excepting those assigned to the Industries and Production Division. Copy of the relevant pages from the Rules of Business, 1973 is attached as “Annex-E”. 10. That from the above excerpt from the Rules of Business, it is crystal clear that the ultimate responsibility lies upon the Respondent No.1 to ensure that the companies owned by it directly or indirectly are working diligently and are not causing any losses to the Government or people of Pakistan intentionally or otherwise. 11. That a project known as Turkmenistan, Afghanistan, Pakistan, India (TAPI) Gas Pipeline for import of gas from Turkmenistan is being carried out by the Respondent No.2 under the supervision
  6. 6. of Respondent No.1 and 3. The following agreements under this project have already been signed: i. Intergovernmental Agreement (IGA) was signed by the Head of States of all the member countries during TAPI Summit held at Ashgabat on 11th December 2010. ii. Gas Pipeline Framework Agreement (GPFA) was signed by respective petroleum ministers of four countries on 11th December, 2010. iii. Heads of Agreement (HOA) was signed by heads of respective commercial entities on 19th September 2010. iv. Gas Sale and Purchase Agreement (GSPA)- Turkmenistan- Pakistan and Turkmenistan-India bilateral GSPAs were signed by the heads of respective commercial entities on 23rd May 2012. On the same day, Afghanistan and Turkmenistan have signed a Memorandum of Understanding on “Long Term Cooperation in Gas Sector”. Afghanistan has also signed the GSPA. Copy of the information about the project available at the website of the Respondent No.2 is attached as “Annex- F”. 12. That now to move forward a quadripartite agreement known as “Operations Agreement” is to be signed. This agreement mainly deals with operational matters related to the Gas Measurement details and allocation of Gas, delivered through a common metering station at the Turkmenistan-Afghanistan border,
  7. 7. among the Buyers. All the Buyers shall have to pay for the value of gas allocated to them through Gas Allocation Schedule. 13. That a draft Operations Agreement was circulated among the parties. Copy of the relevant pages of the Operations Agreement is attached as “Annex-G”. 14. That the Managing Director of the Respondent No.2 has finalized the draft Operations Agreement without taking input of the Respondent No.1 and 3 and other officers of the Respondent No.2 including the Petitioner. Further, the input provided by the Petitioner and other officials was not considered and the MD has finalized the Agreement. Copy of the emails sent by the Petitioner to the MD of Respondent No.2 regarding flaws in the Operations Agreement is are attached as “Annex-H 1, Annex- H2 & Annex- H3 ” . 15. That the Draft Operations Agreement which was finalized by the Managing Director of the Respondent No.2 includes clauses which will be financially damaging for Pakistan. 16. That particularly the mechanism of “Allocation of Gas” stipulated in Schedule 6 of the Draft Operations Agreement is a flawed mechanism requiring Gas Allocation (quantity of gas to-be-paid-for by each Buyer) on the basis of: i. Buyer’s Nomination (a prudent forecast by Buyer regarding his gas requirements, which is binding on the Seller for gas
  8. 8. delivery and on the Buyer for gas acceptance) in all situations other than (ii) & (iii) below; and ii. Buyer’s mutual agreement in a situation defined as “Short-take”; and iii. Transporter’s intimation in a situation defined as “Short-take”. All the above referred three methods provided for determination of Gas Allocation for each Buyer are flawed and will cause serious disputes among the parties and will hard hit Pakistan as the said mechanism is not aneither correct nor fair one. 17. That earlier the Gas Allocation Schedule was included in the Gas Sale Purchase Agreement (the “GSPA”). During the Working Group Meetings, The Petitioner on behalf of Pakistan pointed out flaws in the said Gas Allocation Schedule, therefore, the same was omitted from the execution version of the Gas Sale Purchase Agreement. It was decided that the matter of Gas Allocation Schedule will be taken up with the Operations Agreement. 18. That due to the fact that the Petitioner actively pointed out flaws in the Gas Allocation Schedule, he was removed by the Respondent No.2 from the committee involved in the negotiations and finalization of the Operations Agreement. Further, various coercive measures were taken by some officials of the Respondent No.2 against the Petitioner for pointing out flaws in the Gas Allocation Schedule including removal of
  9. 9. Petitioner’s name from Management Email-Group, withholding the promotion of the Petitioner, initiating false enquiry against the Petitioner and curtailing man-power / authority of the Petitioner while carrying out official works. Copy of the email correspondence sent by the Petitioner in this respect to the senior officers of Respondent No.2 is are attached as “Annex-I 1 & Annex- I2 ” . 19. That the Petitioner was not discouraged by such illegal techniques adopted by some officials of the Respondent No.2. It is pertinent to mention here that it is not only the Petitioner who pointed out flaws in the Operations Agreement, there are other officials of the Respondent No.2 who showed concerns regarding deficiencies in the Operations Agreement. However, when they conveyed their concerns to the Managing Director of the Respondent No.2, he did not give their professional observations any weightage and said that the draft of the Operations Agreement has been finalized. Copy of one such email sent by some officers of the Respondent No.2 recommending amendments in the Operations Agreement is attached as “Annex-J”. 20. That the Petitioner being a technical person knows very well and can demonstrate that the Gas Allocation Schedule which has been included in the draft Operations Agreement will cause financial burden for Pakistan for gas even not utilized by the citizens of Pakistan.
  10. 10. 21. That the following are core flaws of the Operations Agreement in general and Gas Allocation Schedule in particular: i. The Article 5 (Notification of Failure to Supply) of the Operations Agreement is flawed one as the Seller does not have means to confirm individual reduction of gas supply to each buyer as a result of delivery failure. The Seller can only provide aggregate of reduced volume and allocation is required to be carried out in line with allocation procedure. ii. The Article 6.2 (Metering by the Gas Transporter) is a flawed Article as the same does not include provisions for metering by the Gas Transporter at the off-take point of each buyer. Schedule – 6 (Gas Allocation) iii. The Clause 1 of the Gas Allocation Schedule states that the gas allocation shall be in a consistent, fair and equitable manner. However, this clause does not envisage that the allocation is done in a correct way using the meter readings for each buyer at their off-take point as well as line pack variations (such information is only completely available with Gas Transporter). No obligation has been put on Gas Transporter to provide Seller with information / meter readings required for correct allocation of Buyer’s Delivered Volume.
  11. 11. iv. In the Definition of “DP buyers’ Delivered Volume” two different terms “determined” and “Specified” have been used for the same matter. Using two different terms will ultimately confuse the matter and will affect allocation of gas and as a result will entail financial consequences. v. The definition of “short supply” has not been included in the Gas Allocation Schedule. Further, Seller’s default in connection with short supply has been completely ignored. vi. “Short-take” is being defined as a fault of the buyer which cannot be defined so unless the delivery pressure is above the delivery pressure range. vii. The formulas prescribed under Clause 3 are also faulty. The opening sentence of the said clause reflects that the Seller shall be incapable of correctly allocating gas unless some information is made available to it by the Transporter of gas. viii. The Formula prescribed under Clause 3.1 as Scenario 1 fails to allocate gas correctly in case of a short supply which results due to a “Rejection Notice” from one of the buyers to take off-specification gas. This formula also fails to allocate gas correctly in a scenario (no short take and no short supply) where the Transporter determines that one buyer is not able to receive gas equal to his nominated volume as a result of unavailability of any allowance in such buyer’s line pack balance.
  12. 12. ix. Under Clause 4, the Short Take Allocation Scenario is discussed. Under Clause 4.1 if on any day a short take has occurred by any buyer then such buyer may notify the Seller of its Delivery Point Buyer’s Delivered Volume. This sub clause 4.1 assigns the duty to determine the extent of default to a buyer, whereas under the agreements and the scheme of the project none of the buyers individually or collectively have the means and information available to determine their individual DP Buyer’s delivered volume. x. Conditions prescribed under sub-clauses 4.1.1 to 4.1.3 can never be met without intervention by the Gas Transporter, however, in the said clauses there is no mention of the Gas Transporter. xi. The powers given to the Seller under sub-clause 4.1.4 will cause disputes regarding invoiced gas volume, gas reconciliation and under take penalty. Further this will cause troubles for execution of the Gas Transportation Agreement. xii. Clause 4.2 fails to incorporate binding obligation on Gas Transporter to notify information / meter readings to the Seller that are necessarily required for correct allocation of Gas. xiii. It is completely ignored in the entire text of Schedule-6 (Gas Allocation) that the “Parties” to Operations Agreement include Gas Transporter (subsequent to his
  13. 13. signing of Transporter’s Deed of Adherence) and necessary obligations are not put on the Gas Transporter with reference to allocation of gas. 22. That the above stated flaws in the Operations Agreement as well as in the Gas Allocation Schedule will cause future operational problems for Pakistan in addition to imposing additional financial burden. Ultimately, the said financial burden will be shifted to the citizens and consumers of the imported gas. 23. That the decision of the Respondent No.2 to accept the flawed Gas Allocation Schedule is illegal, non-transparent, based on mala-fide and ulterior motives. In addition to that, this gas allocation mechanism is certainly not in favor of the people of Pakistan. 24. That in other countries such upstream / entry-point allocation of Gas (for common gas transportation pipeline receiving gas for different Shippers through common meter) is correctly determined either by an “Independent Allocation Agent” or by “Gas Transporter” based on clearly defined rules / codes which incorporate (as a minimum requirement) consideration of Off-take meter readings, variation in line pack and Shippers’ Nominations (A Buyer is called a Shipper under Gas Transportation Agreement). Some examples are provided: a. Energy Market Authority of UK Singapore has published “Gas Network Code” on its website, and Section-E of this code provides mechanism of entry point gas allocation based on exit
  14. 14. point meter and gas pack variations (gas shrinkage as defined in the code). Section-E & L of the Gas Network code Code is are attached as Annex-K & Annex-L . b. Joint Office of Gas Transporters UK have issued a Uniform Network Code – Transportation Principal Document on its website, and Section-E of this document provides mechanism for entry point gas allocation based on exit point meter and gas pack variations. Section-E of the Transportation Principal Document is attached as Annex-M. c. Access Arrangements of Australian Amadeus Gas Pipeline also discuss entry point gas allocation, gas pack variations and exit point allocations for correct reconciliation. Relevant Extract of Access Arrangements is attached as Annex-N. d. JEMENA is a large Australian energy provider (Gas , Electricity & Water) and has made available on its website Queensland Gas Pipeline Operation Manual which provides details of entry point gas allocation, gas pack variations and exit point allocation. QPG Operations Manual is attached as Annex-O.[network codes for British Transco (Section-E), Australian NT and Queensland Gas pipeline have also been included which may be discussed for inclusion in this writ petition] 25. That Oil and Gas Regulatory Authority which has the mandate to regulate all Gas Transportation Pipelines in Pakistan has placed on its’s website draft “Third Party Access Rules” which also recognize allocation of entry point allocation of gas to be
  15. 15. incorporated in the “Access Arrangements” based on entry-exit meter readings, line pack imbalance and nominations. Attached as Annex- L P . 26. That the draft Operations Agreement is soon going to be executed by the Respondent No.2. If the said agreement is executed it will cause grave and serious financial consequences for the people of Pakistan as huge unjustifiable financial burden will be imposed upon them. 27. That the Respondent No.1 and 3 have failed to supervise the Respondent No.2 and to ensure that the draft Operations Agreement is fair (particularly the Gas Allocation Schedule) and does not impose on the people of Pakistan illegal burden. The actions and inactions of the Respondents are being challenged here, inter alia, on the following grounds: GROUNDS a. The inaction of Respondent No.1 in safeguarding the consumers of gas from extra financial burden is contrary to the responsibilities imposed upon it under the Constitution and Law. b. That the Respondent No.1 has failed to fulfill its responsibilities imposed upon it under the Rules of Business, 1973. Therefore, appropriate directions are needed to be issued to the Respondent No.1 in order to safeguard fundamental rights of the people of Pakistan.
  16. 16. c. Under Article 97 of the Constitution, the Respondent No.1 has been entrusted with executive authority of the Federation and also under the Rules of Business it is its responsibility to protect the investments of the Government in the field of gas and supervise the undertakings (companies) owned directly or indirectly by the Federation. The inaction of the Respondent No.1 is contrary to the command of the Constitution and law. d. That the actions and inactions of the Respondents are also in violation of Article 4, 18 and 24 of the Constitution. Further, under Article 5, it is the duty of all citizens to have loyalty to Pakistan. Moreover, having obedience to the command of law and the Constitution is inviolable obligation of all citizens. Therefore, actions and inactions of the Respondents are in sheer violation of these provisions of the Constitution. e. That the process of finalizing the draft Operations Agreement lacks transparency as key officials were kept in dark and the draft agreement was finalized by the MD of the Respondent No.2 for execution. f. Under the Draft Agreement, additional burden shall be imposed upon the consumers of gas which is not permitted under Article 24 of the Constitution. Further, additional burden of gas shall preclude the citizens to establish new businesses, which is a violation of Article 18 of the Constitution. g. Under Article 29 read with Article 39 of the Constitution, it is the responsibility of the Respondents to conclude such a deal which
  17. 17. ensures economic well being of the citizens of Pakistan. However, due to actions and inaction of the Respondents, huge additional financial burden will be imposed upon the people of Pakistan hindering ultimately their economic well being which is against the command of the Constitution. h. That the Respondents are exercising their authority in a colorable manner coupled with mala-fide and ulterior motives which is amenable to the jurisdiction of this honorable court available under the ambit of judicial review of executive actions. i. That the Petitioner has exhausted all forums available to him in the Company’s hierarchy and does not have any other alternate, efficacious or adequate remedy for his grievance except filing of a Petition under Article 199 of the Constitution. Further, under Article 199 of the Constitution, this honorable Court has ample jurisdiction to issue directions to a person performing functions in connection with the affairs of the Federation for doing anything he is required to do under law. j. That the Petitioner craves gracious permission of this honorable Court for raising further grounds at the time of hearing. Prayer: In view of the abovementioned facts and circumstance, it is humbly prayed that the inaction of the Respondent No.1 & 3 to supervise the Respondent No.2 may kindly be declared illegal, and further, the Respondent No.1 & 3 may also kindly be directed to look into the
  18. 18. matter and ensure that in the Operations Agreement a correct & fair mechanism for allocation of gas is adopted. Further, the Respondents may kindly be directed not to take any coercive measures against the Petitioner for pointing out flaws in the Operations Agreement and for filing the instant Petition. Costs of litigation may also be awarded to the Petitioner. Any other relief which is deemed fit and proper in circumstances of the case may also be granted. Petitioner Through Hasnain Ibrahim Kazmi Advocate Supreme Court Hafiz Naeem Advocate High Court Certificate: As per instructions from the Petitioner, this is the first writ petition on the subject matter and no other case is pending in the Supreme Court of Pakistan on the same subject matter. Counsel KAZMIZ Advocates & Corporate Consultants House No.14, St. No.48,
  19. 19. F-8/4, Islamabad Phone: 051-285-4458 & 59 Fax: 051-2854460 Email: info@kazmiz.com

×