IHC lifts bar on collection of gas levy

ISLAMABAD:

The Islamabad High Court (IHC) has allowed the government to collect gas levy from captive power plants but barred it from using the money until the ad hoc legislation receives approval of parliament, in an order that addresses the IMF's concerns for now.

In its order, the court conditionally lifted its three weeks old stay granted against the recovery of Rs791 per mmBtu gas levy from owners of the factories using gas to produce in-house electricity.

The levy has been imposed on the instructions of the IMF to compel industries shift from gas to the national power grid.

The government wanted to use the money to reduce the electricity prices by about Rs1 unit in line with an understanding with the IMF.

The court released its reserved order after AGP Mansoor Usman Awan through an application sought vacation of the stay under.

"Upon consideration of the foregoing, the civil miscellaneous application is hereby allowed, and the interim order is recalled subject to the following express conditions," reads the judge order.

The court instructed that "all tax amounts collected from the petitioners under the impugned Ordinance shall be deposited and retained in the Federal Consolidated Fund for the duration of the Ordinance's validity, i.e., 120 days from its promulgation".

The court further ruled that the money shall not be appropriated, transferred, or expended for any purpose other than the one provided under the impugned ordinance.

The order stated that "in the event that the impugned Ordinance does not receive Parliamentary approval, all sums collected under its authority shall, upon the Ordinance's lapse, be forthwith refunded to the petitioners in full, without deduction or delay".

In February, the government had promulgated a Presidential Ordinance to impose off-grid gas levy on these in-house power plants but did not notify the rates. During the IMF talks, it became an issue and on March 7, the government notified a 23% increase in gas rates for industrial captive power plants (CPPs) by imposing a Rs791 per mmBtu grid levy.