Fri. Mar 31st, 2023


The federal government has decided to expedite court proceedings to recover Rs453 billion on account of Gas Infrastructure Development Cess (GIDC) from defaulters, mainly from the fertiliser sector.

The granting of stay orders by the lower courts – against the decisions of the Supreme Court – has enabled business tycoons, mainly from the fertiliser industry, to stop GIDC payments worth Rs453 billion to the federal government.

Officials revealed that “the prime minister’s office has now formed a ministerial committee to examine different options including a forensic audit of fertiliser manufacturers and other businesses to recover the GIDC amount. Currently, there are a total of 2,496 petitions in the courts, of which over 2,000 are in the Sindh High Court and 474 in the Lahore High Court”.

Two fertiliser manufacturers, with a fixed gas price contract of 10 years, claim that the discounted gas price of $0.70 per million British thermal units (mmbtu) offered to them under the Fertiliser Policy 2001 was inclusive of all taxes, duties, levies, fees, and charges, whether local, federal or provincial, except for General Sales Tax (GST) or a similar duty.

Sources told the Express Tribune that a ministerial committee on GIDC recovery had held a meeting recently and decided to expedite proceedings against the recovery of GIDC pending in different lower courts. The Minister of State on Petroleum, Musadik Malik stated during the meeting that plain reading of the Supreme Court decision provides that Cess will not be charged after July 2020, unless the federal government demonstrates that the existing collection of GIDC as well as the anticipated collection, is spent on infrastructural projects.

Additional secretary finance opined that the finance division represented the federal government in the GIDC case before the Supreme Court of Pakistan and as per its decision, interest was waived by the court. However, on the expenditure of the collected GIDC, the government was directed by the Supreme Court to initiate the work on the Iran-Pakistan (IP) Pipeline, Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline and preferably the North-South Gas Pipeline Project.

He stated that the amount collected under GIDC as non-tax revenue forms part of Federal Consolidated Fund Account number one; the money is fungible and can be made available, as required by the petroleum division. He highlighted that in the past, funds from GIDC were allocated but the same could not be utilised by the petroleum division.

The minister of finance and revenue was of the view that consultation with the stakeholders for the purpose of recovery is essential. This will provide the government with a clearer picture of how many of the arrears are being recovered. He further stated that the break-up of arrears of GIDC, sector-wise, may be shared before convening a meeting with the relevant stakeholders. He suggested that the GIDC committee should hold meetings with stakeholders.

After discussion in the meeting, the committee decided that a meeting with the concerned stakeholders will be convened within 15 working days. It was decided that the additional attorney general (AAG) Supreme Court of Pakistan will get the pending GIDC cases expedited in the respective courts of law. Focal persons will also be appointed to pursue the disposal of cases of stay orders vigorously.

The Supreme Court decision stated that as “all industrial and commercial entities, which consume gas for their business activities, pass on the burden to their customers, therefore, all arrears of Cess that have not been recovered so far, shall be recovered by the companies under the GIDC Act 2015 from their consumers. However, as a concession, the amount will be recovered in 24 equal monthly installments, starting August 1, 2020, without the imposition of a late payment surcharge. The late payment surcharge will only become payable for delays that may occur in the payment of any of the 24 installments.”

Published in The Express Tribune, September 25th, 2022.

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