GIDC may have adverse impact on industries, apprehends PCMA chief

KARACHI: Ahmed Chinoy, Chairman of Pakistan Cloth Merchants Association (PCMA) said the textile industries and other industries in Pakistan were facing economic crises due to Covid pandemic while the Covid-19 crisis has also forced the global investors to put their new investment plans on hold.

He said there is no visible improvement in employment even after the business activities were allowed and countrywide lockdown eased. The small and medium industries -the main providers of jobs- are still struggling because of lack of funds and demand.

Ahmed Chinoy said the global lockdown imposed to contain the virus which badly impacted economic activities, businesses, people's income and their purchasing power. As a result, the demand for many products dropped sharply. The revival of demand for products like cement, textile and chemical would attract foreign investment in future. The financial health of companies around the globe is deteriorating.

At the time the Supreme Court announced its decision on Gas Infrastructure Development Cess (GIDC), directing recovery of GIDC payables from the industries. The court has ordered companies to pay outstanding amount of Rs 417 billion. GIDC was imposed by the government back in December 2011, to raise funds for development of gas infrastructure in the country. GIDC Act provides legal framework which allows government to levy and collect the cess from gas consumers other than domestic sector consumers. According to the Act, the collected amount shall be utilized by the Federal government for Iran Pakistan (IP) gas pipeline, Turkmenistan-Afghanistan-Pakistan-India (TAPI), LNG and other ancillary projects.

The GIDC impact on fertilizers industries gas sector, cement sector and textile industries may result negative. Most industrial consumers will see their earnings drop and liquidity adversely affected owing to large cash outflows as the government recovers outstanding dues. The cost involved in doing so falls on the industrial and commercial consumers. The industrial and commercial consumers, who consume more than three-fourth of the total supply of natural gas, apart from being major beneficiaries of the imported gas, would on account of their business activity pass on the burden to their clients/customers being part of the cost of their goods or services, which they sell to their customers/clients.

Ahmed Chinoy requested the Supreme Court to review the decision in favour of Pakistan industries to survive and provide level playing field instead of creating more hardship for industries and people of Pakistan.-PR

Copyright Business Recorder, 2020