The Senate special committee on Gas Infrastructure Development Cess (GIDC) was informed on Friday that there are Rs 40 billion outstanding dues against CNG stations on account of levy since imposition of GIDC since January 2012 to May 2015. The committee meeting held here with Iqbal Zafar Jaghra in the chair, discussed GIDC related issues of fertiliser plants, CNG sector and ceramic factories.
The committee asked CNG sector to finalise their proposals within next 24 hours and submit them with the committee so that the penal can decide about the outstanding dues against various sectors. Ghiyas Abdullah Paracha of All Pakistan CNG Association (APCNGA) while briefing the committee said that the Oil and Gas Regulatory Authority (Ogra) during in 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.
He said that CNG price in region one was Rs 75.08 per kg, while in region two it was Rs 67.50 per kg and if the government was deciding to recover the previous GIDC from the owners of CNG stations it will simply force the owners to default as a result the entire sector will be eliminated. He said that the sector has a total investment of Rs 500 billion and was facing serious problems in running the business since 2011 as most of the time gas was being cut off. Briefing the committee Shahid Khaqan Abbassi, Federal Minister for Petroleum and Natural Resources expressed support to the CNG sector and said that the regulator remained unfair with them.
The committee was informed by the CNG sector that their prices have been capped by Oil and Gas Regulatory Authority (Ogra) since November 2012, but the cost has gone up significantly since then. "The electricity rates have been revised upwards four times since 2012, minimum labour wages were Rs 8,000 in 2013 and it was Rs 13,000 to Rs 15,000 now in different provinces," Junaid Ismail representing the CNG sector said. He said that they were against GIDC as it had brought the CNG prices into negative zone.
As the senators continued their queries, Paracha informed the committee members that the petroleum ministry and Ogra have not only lost their case in the Supreme Court but the review petition against their victory was also turned down by the apex court. The committee was apprised that as per their current rate of Rs 76 per kilogram, the cost of gas is around Rs 32, general sales tax around Rs 11, GIDC was some Rs 13 and only Rs 16 remains for all other expenditures including profits.
"Ogra and the petroleum ministry have been saying that we can pass on the GIDC to the consumers - but then it will make CNG rates jump to Rs 90 per kilogram," Paracha said adding, "Who will buy CNG at that rate, besides there is no GIDC on LNG operated stations." As the committee members discussed the matter amongst themselves, Senator Ilyas Bilour asked the representatives of CNG sector to tell in detail their pricing formula.
The committee directed APCNGA representatives to come up with their suggestions within next 24 hours so that the matter can be resolved. The committee proposed that GIDC from those CNG stations owners who went to the court may not be recovered and those submitted it to the national kitty must not payback.
Whereas in its' briefing to the committee, the fertiliser sector 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 want abolishment of GIDC as it was written in the policy that gas price would not be increased, while the old players maintained that giving relief to them would make the field uncompetitive.
Chief Executive Officer (ECO) of Engro Fertiliser briefing the committee said that as per Fertiliser Policy 2001 the government exempted new urea plants from all kind of taxes but now the government has imposed GIDC on them. He requested the committee to recommend the government of honouring the agreement with the investors. He said that Engro invested a total $1.1 billion on setting up of the new urea plant and government guaranteed the provision of uninterrupted gas supply at $0.77 per MMBTU to the new plants.
Representative of Pak Arab Fertiliser, Fatima Fertiliser and others also requested the government to exempt new plants from GIDC as per policy and start supplying them gas as all these plants were not getting gas since 2011. Officials from the Fuji fertilisers urged the committee to impose uniform cess on all the fertiliser plants, but at the same time they admitted that these plants also enjoyed same intensive when they were set up.
Joint Secretary Ministry of Finance, Mohammad Anwar briefing the committee said that CNG outlets have collected the cess from consumers and they should pay it to the national kitty.
The committee members flayed the OGRA for not revising the CNG prices since January 2013, saying that the regulator was bent upon forcing the CNG operatives to close their businesses. Senator Mohammad Ali Saif of MQM proposed a special audit of the CNG stations should be conducted to determine wither CNG outlets passed on GIDC to end consumers or not. Senator Saleem Mandviwala said that audit of all the CNG station was not possible in a few weeks, saying that it will take years to determine it.
Senator Mohsin Laghari said that fertiliser plants and other sectors should have no objection over the imposition of GIDC as it was passed on to the final consumers. The meeting postpones the mater of GIDC on fertiliser plants and decided the mater will be fixed in next meeting to be held on November 9.
"We can show all the detailed working and that is out Rs 16 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 for profit." Paracha added. He said that before the implementation of GIDC 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 stay order against GIDC, it helped us maintain the stations operational." Eventually the committee and the CNG association agreed that GIDC would not charged for the period that they had obtained stay orders from the court, while those stations who have paid the GIDC will have any claims for the return of paid tax.
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