Rs 136 billion GIDC dues: government, other stakeholders fail to reach decision

The government and other stakeholders have failed to reach any decision on the issue of outstanding dues to the tune Rs 136 billion on account of Gas Infrastructure Development Cess (GIDC) against various gas consumers. According to senior officials in the Ministry of Petroleum and Natural Resources, the GIDC was imposed on different gas consumers in 2012 and since then an amount of Rs 136 billion has been collected from gas consumers, while an amount of Rs 136 billion was still outstanding against them.
An official of the Ministry of Finance said that all those segments which collected the cess from consumers will have to pay in the national kitty as this amount is dedicated to fund the construction of imported gas projects including Iran-Pakistan (IP), Turkmenistan-Afghanistan-Pakistan-India (TAPI) and Liquefied Natural Gas pipeline projects. Sui Northern Gas Pipelines Limited (SNGPL) and Sui Southern Gas Company Limited (SSGCL) have requested the government to release Rs 136 billion collected under the head GIDC to the gas utilities so that they can expedite work on LNG pipeline.
In reply to the gas utilities request, the Ministry of Finance has directed the two gas companies to seek the required funds from the market instead of seeking release under the dedicated GIDC. The Petroleum Ministry has issued letters of comfort to the two gas companies to undertake construction of LNG-related infrastructure which will cost a total of Rs 125 billion.
According to officials, fertiliser plants paid GIDC to the government, while Captive Power Plants and Independent Power Producers (IPPs) had not paid any amount on account of GIDC. He said that the country was implementing different gas infrastructure related projects with an estimated cost of Rs 1 trillion in the coming few years and to generate the required funds for the projects GIDC was critical.
The Petroleum Ministry official said that the Compressed Natural Gas (CNG) outlets have to pay an amount of Rs 40 billion to government but they are not willing to pay the amount. He said that the CNG station owners have argued that Oil and Gas Regulatory Authority (OGRA) since 2012 did not determine their gas tariff while during the period inputs costs have increased manifold. Ghiyas Abdullah Paracha of All Pakistan CNG Association (APCNGA) said that Ogra during three years did not determine the operating cost of the CNG outlets and in Punjab during the same period majority of the outlets remained close because of gas suspension.
While rejecting the claim of the government, he said that CNG station owners have already paid Rs 21 billion and the government should adjust remaining 19 billion as the CNG stations were functioning on the price notified in 2012. CNG consumers'' cost in Balochistan, Khyber Pakhtunkhawa and upper parts of the Punjab is Rs 76 per kg which include Rs 32 gas price, general sales tax about Rs 11, GIDC about Rs 13 and only Rs 16 remained for all other expenditures and profits.
"We can show all the detailed working; out of Rs 16 meant for all other expenditures Rs 13 comes out to be the cost of electricity and how can anyone allocate Rs 3 for labour cost, rent, water bill, other local taxes and still save something in profit." Paracha added. He said that before the implementation of GIDC bill they had the cushion of Rs 13 for other expenditures including repair and maintenance. "That is why we have all gone to the court and obtained a stay order against GIDC; it helped us keep the stations operational."
According to Petroleum Ministry officials on the issue of GIDC the fertiliser sector has divided in two groups, the old plants that had been in business before the 2001 fertiliser policy and the new ones that have been established under the 2001 policy. The new plants wanted abolishment of GIDC while the old players maintained that giving relief to them would make the field uncompetitive, he said and added that the old fertiliser plants have also enjoyed such exemptions for ten years but they are opposing same incentives for new ones.