ISLAMABAD: The industrial sectors, financially hit by the recent verdict of Supreme Court of Pakistan on payment of Rs 417 billion to the government as Gas Infrastructure Development Cess (GIDC), are mulling seeking a review of the verdict.
GIDC was imposed by the federal government in December 2011, aimed at raising funds for development of gas infrastructure in the country. The GIDC Act provides a legal framework which allows government to levy and collect the cess from gas consumers other than domestic consumers.
A three-member special bench headed by Justice Mushir Alam and comprising Justice, Faisal Arab and Justice Mansoor Ali Shah after hearing 107 petitions/ appeals of various textile, mills, cotton mills, sugar mills, ceramics companies etc had reserved the judgment on February 20, 2020, which was announced last week.
According to the SC verdict, fertilizer sector( old plants) are to pay Rs 80.426 billion, fertilizer feed ( new) Rs 67 billion, fertilizer fuel, Rs 16.566 billion, general industry Rs 46.327 billion, IPPs, Rs 9.132 billion, KE, Rs 36.509 billion, Genco/ Wapda, Rs 22.563 billion, captive power, Rs 101.725 billion, CNG Region-I Rs 41.655 billion and CNG, Region-II Rs 35 billion.
These sectors collected Rs 295.4 billion during the last ten years whereas outstanding amount against them is Rs 456.946 billion. The accrued amount of GIDC is Rs 752.349 billion.
The country's textile sector, which is supplied gas as input for captive power plants, would be severely hit. All Pakistan Textile Mills Association (APTMA) has started consultation with its members to seek a review of the SC decision.
Executive Director, APTMA, Shahid Sattar, has written a letter to all Members of Association stating that it is preparing to file cases for review on the GIDC judgment of the SC on the following grounds;(i) captive versus industrial Rs 200/ Rs 100 rate;(ii) liability/ application of judgment on amount accrued prior to 2015;(iii) textile sector has not passed on burden of GIDC as it is not a regulated market unlike fertilizer and CNG and ;(iv) in case no work is carried out on North-South pipeline within the prescribed time and for laying any of the two major pipelines (IP and TAPI) if the political conditions become conducive, the purpose of levying cess shall be deemed to have been frustrated and the GIDC Act, 2015 would become permanently unoperational and considered dead for all intents and purposes. Does this mean APTMA will get refund if paid GIDC in 24 installments?
The Association in its letter further stated that the liability of its members can be reduced by about 40 to 50 per cent in case of success.
The Association plans to file two separate cases through top-notch lawyers. The contribution is calculated on an estimated basis that at least 100 members contribute Rs 200,000 each.
Fertilizer sector is also reviewing the situation and discussing different options to deal with the SC verdict.
Some members of fertilizer industry are of the view that since they do not fall under the GIDC Act, they will seek a review, whereas those who have to pay outstanding GIDC amount, argue that since they collected GIDC in years past and spent on development of infrastructure at Mari network, how can they pay the amount at one go?
Fauji Fertilizer will be required to pay Rs 63 billion, followed by Fauji Fertilizer Bin Qasim, Rs 22 billion, Engro Fertilizer, Rs 19 billion and Fatima Fertilizer- Rs 6 billion.
"We should be given at least ten years to pay as payment made in previous decade has yet to be utilized for this purpose. We request inclusion of our past and future investment on gas infrastructure i.e. gas compression and processing facilities in the list of projects to be funded from GIDC," said an industry source.
Fertilizer industry also wants that its outstanding subsidy payment of Rs 19.3 billion be adjusted.
Fertilizer sector's GIDC rate in the past was much higher than other sectors. The recent revision has been adjusted in price reduction and benefit passed on to the farmers to the tune of Rs 400 per bag of urea.
Fertilizer industry further argues that payment pressures may lead to financial difficulties to the industry.
Talking to Business Recorder, Ghiyas Paracha, Central Chairman of the All Pakistan CNG Association (APCNGA), said that implementation of Supreme Court decision is mandatory but at the same time, CNG sector would be massively hit as compared to other sectors.
He said the Association is holding in-house consultations for future line of action and in this regard, he would also consult with the Association's lawyer for a review.
A representative of Independent Power Producers (IPPs) told this newspaper that IPPs were continuously paying GIDC to the gas companies and invoiced to CPPA-G. However, CPPA-G did not accept invoices, on the plea that since the case is sub-judice, invoices cannot be received.
"Since the SC has decided the matter, now IPPs will not submit their invoices to the CPPA-G as per the agreements," he added.
Karachi Electric (KE) is also consulting its lawyers to file a review petition in the Supreme Court of Pakistan, said on official of the company.
Copyright Business Recorder, 2020
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