The Kuwait administrative court announced this week that the Cabinet decision to increase petrol prices is illegal, since it was issued in violation of the law, but it rejected a request to suspend the increase immediately.
The petrol price hike, ranging from about 40 to 80 percent depending on the type, met stiff opposition from lawmakers and activists when introduced following a slide in oil revenues. It was the first such increase since 1998. MPs want the government to compensate Kuwaiti citizens who comprise around 30 percent of the 4.3 million population, which also includes about three million foreigners. The Cabinet has said the decision is part of a series of measures to meet a budget deficit due to a sharp drop in oil revenues, which previously made up around 95 percent of the country’s total income.
Judge Jassem Al-Rashed said the decision was issued by the Cabinet based on a recommendation by a Cabinet committee that reviewed subsidies and prices of public services. However it was implemented without getting the approval of the Supreme Petroleum Council (SPC), the highest oil decision-making body headed by the prime minister, the court said.
This violated a law issued in 1980 establishing Kuwait Petroleum Corporation that states that decisions like this should be approved the SPC and issued in an Amiri decree, the court insisted. Based on this understanding, the court ordered the government to scrap the petrol hike decision issued in August, which came into effect on Sept 1.
Kuwait liberalized the prices of diesel and kerosene in Jan 2015, and revises them monthly. Other oil-rich Gulf states had already raised fuel and electricity prices. In April, the parliament approved a government-sponsored bill to raise electricity and water prices paid by foreign residents and businesses, but exempted Kuwaiti citizens. The OPEC member recorded a budget shortfall of KD 4.6 billion ($15.3 billion) in the fiscal year which ended on March 31. It was the first shortfall since the fiscal year to March 1999.
MP Faisal Al-Duwaisan welcomed the court’s verdict, saying that the ruling is evidence of the government’s lack of planning. He also urged the government not to rush decisions. MP Sultan Al-Shemmari warned that the government will be faced with a “tsunami of grillings” if it does not withdraw the petrol price hike in response to parliamentary and popular demands. He said he will not accept that the government plugs the budget deficit at the expense of citizens.
The case will now go to the court of appeals and later to the court of cassation, whose decisions are final. If the appeals court confirms the lower court ruling, them the price hike will be suspended immediately. It was not immediately known what the government will do to rectify the procedural flaw in anticipation of the appeals court’s decision. But the surprising court ruling could stop, though temporarily, any actions planned by the lawmakers against the price increase, because the issue is now being looked by courts.
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