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.

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

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

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”.

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

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,

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

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

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.

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.

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.

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

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

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

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.

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

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

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 KazmiAdvocate Supreme Court

Hafiz NaeemAdvocate 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 ConsultantsHouse No.14, St. No.48,

F-8/4, IslamabadPhone: 051-285-4458 & 59Fax: 051-2854460Email: info@kazmiz.com