Petroleum levy challenged in court

LHC summons petroleum secy in next hearing scheduled on Feb 27.

ISLAMABAD: Liquefied petroleum gas (LPG) marketing companies and consumers have filed a petition in the Lahore High Court (LHC) to challenge the imposition of petroleum levy, which has led to an increase in gas prices by Rs13,500 per ton.

Justice Mansoor Ali Shah heard the petition filed by Supreme Court Senior Advocate Shahid Hamid on behalf of LPG companies and consumers.

After hearing initial arguments, the court issued notices to the deputy attorney general and asked petroleum secretary to appear in person on the next date of hearing on February 27.

In October 2011, the LHC suspended the levy, which was introduced as part of the LPG Policy 2011. Later, the levy was introduced as an amendment to the Petroleum Products Ordinance 1961.

Industry people say the levy has taken LPG prices to record highs above Rs160 per kg with sales beginning to fall as LPG loses competitiveness compared to other fuels.

“If the levy remains in place, state-owned LPG producers, which account for 70 per cent of domestic production, will eventually have to bear the pressure,” said Belal Jabbar, spokesman for the LPG Association of Pakistan.

“In an effort to keep their market, producers will be forced to drastically reduce prices, which will defeat the very purpose of the levy which sought to increase prices of local product and equate it with that of imports,” said Jabbar.

LPG companies have termed the levy discrimination against local producers, who meet 80 per cent of the country’s requirements.

Published in The Express Tribune, February 10^th, 2012.