Settlement between litigants (fertilizer, textile and CNG sectors) and the government on allowing the government to access 50 percent of the collected Gas Infrastructure Development Cess (GIDC) from 2012-15 has not yet been reached.
Finance Minister Asad Umer in his post-amendment finance bill 2019 had stated that the Cabinet had approved the law that would allow the government to access 50 percent of the Rs 400 billion already collected as GIDC; however litigants have a stay order that disallows the government any access to these funds.
A single member bench of the Sindh High Court in response to identical pleas filed on October 26, 2016 challenging vires of the Gas Infrastructure Development Cess Act, 2015 and Gas Infrastructure Development Cess Act, 2011 and Gas Infrastructure Development Cess Act, 2014 had ruled it ultra vires of the constitution. However, the constitutionality of GIDC is still pending in the intra-court appeal in Sindh High Court.
Umer announced on Thursday that the cabinet had directed the concerned ministries to prepare recommendations on reducing GIDC rates for future for those sectors that agree to a settlement with the government. He further added that any settlement with the fertilizer sector would be contingent on reducing the price of fertilizer by Rs 200 per bag.
Fertilizer, textile and CNG sectors are major defaulters, with the CNG and textile sector's outstanding dues estimated at Rs 80 billion each. The government has set the GIDC collection target for fiscal year 2018-19 at Rs 100 billion. For financial year 2017-18, the GIDC receipt target was set at Rs 110 billion, which was later revised down to just Rs 15 billion.
Public Accounts Committee (PAC) will take up the matter of outstanding dues of GIDC collected from consumers but not deposited into government account, sources said. If a settlement is reached then the fertilizer companies would benefit at the cost of the poor farmers who have already deposited the GIDC with the companies, officials told BR on condition of anonymity.
GIDC was first imposed by the Pakistan Peoples' Party (PPP) government on gas consumers, including fertiliser, captive plants and CNG to raise funds to execute gas pipeline projects including LNG project. GIDC became controversial when the Pakistan Muslim League-Nawaz (PML-N) government, instead of spending the amount on building pipeline projects including Turkmenistan Afghanistan Pakistan and India (TAPI), and Iran Pakistan (IP) Gas Pipeline made it part of the budget.
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