Under what law POL products being taxed: CJP

KARACHI: The Supreme Court on Thursday directed the Ministry of Petroleum, Pakistan State Oil (PSO), Oil and Gas Regulatory Authority (Ogra) and others to file comprehensive statement along with details of the last six months of petroleum import bidding and justification of government levy and other charges in fixation of oil prices.

Hearing a suo motu proceeding pertaining to high prices of petroleum products, the Supreme Court’s three-member bench headed by Chief Justice of Pakistan (CJP) Mian Saqib Nisar questioned that under what law taxes have been imposed on petroleum products, observing that people have been deranged for being overburdened.

The court inquired from the PSO deputy managing director as to how the prices are fixed. Yaqoob Sattar submitted that the PSO is the largest importer of crude oil from international market which is obtained through lowest bidding. He said the PSO had imported 266.66 mmp worth Rs16.6 billion. About fixation of oil products' prices, he submitted they are fixed through a monthly mechanism that includes cost of import oil, Rs9.8 per litre government levy, Rs3.83 per litre trade pool to equalise oil prices, Rs3.383 per litre oil marketing companies margin, Rs2.55 dealers commission and general sales tax of 15%.

He said the PSO has Rs300 billion outstanding against different ministries including that of water and power which is yet to be recovered. To a court’s query, he said the PSO has obtained Rs95 billion loan from banks for running its affairs for which it has to annually pay Rs7 billion mark up. The court took exception over PSO’s failure to recover Rs300 billion and for borrowing from banks to run its affairs.

The court observed that prima facie there is something fishy in the purchase, import and the bidding process for the crude and hinted that this will be verified through independent auditors appointed by the court. The court observed that the PSO and Ogra have to justify the price hike, as the people are reeling under the increasing cost of petroleum products. The court asked the OGRA representative as why oil marketing companies are being given Rs.3.38 per litre margin. The court also inquired from the FBR representative as why the Chairman FBR did not appear despite notice. The FBR representative submitted that the Chairman FBR was monitoring the amnesty scheme which was to be concluded by June 30. The court observed that FBR portal has been chocked and the court knows about the scheme.

The court directed all the relevant secretaries including Chairman FBR, secretary ministry of petroleum, MD PSO, Ogra and others to appear before the court on Friday along with a comprehensive statement as well as with 6 months oil import bidding and the justification for levy and the oil marketing companies margin, dealer commission and general sales tax on petroleum prices.

While hearing human rights case with about frequent power breakdowns and loadshedding in Karachi and other parts of the province, the CJP directed the K-Electric to file an undertaking that there will be no loadshedding in the city and the power utility will upgrade its power distribution infrastructure.

To a court’s query, the KE representative said Karachi has a demand of 3,336 MW during summers which is to be adjusted by the power utility through its 2,569 MW production. He said they have reduced load shedding in 65% areas of the city and infrastructure has been improved in the high loss areas including Al-Azam Square and the F.B Area. He said the KE is investing in the infrastructure and new meters and wires have been installed for uninterrupted power supply.

The court observed that it seems that power crisis is due to lack of proper power distribution infrastructure and directed the KE to upgrade the infrastructure. The court observed that the KE should also use other resources instead of gas supply as the performance of the Sui gas company is not also upto the mark.

The civil society counsel Faisal Siddiqui said the KE did not implement the National Electric Power Regulatory Authority’s recommendations for upgradation of the system and full utilization of its power generations.

The court observed that it wanted to create facilities for the citizens of Karachi and the KE and all the other concerned should make efforts to end load shedding in the city and for this the Supreme Court is ready to help the power generation company. The court directed the KE to submit an undertaking that there shall be no load shedding and the weak and fragile power distribution system will be upgraded.

Meanwhile, the court also directed all the loan defaulters to refund the loans. The court observed that every loan defaulter is portraying their inability to pay the debt and when their claim is verified they are found roaming in luxury vehicles.