A three-member special bench of the Supreme Court (SC) will start hearing 107 pending petitions regarding Gas Infrastructure Development Cess (GIDC) levy, from today. Attorney General for Pakistan Anwar Mansoor Khan on behalf of the federal government on September 6 had filed an application requesting the apex court for hearing out-of-turn pending cases regarding the GIDC levy.
The GIDC controversy gained attention when the government promulgated GIDC (Amendment) Ordinance 2019 on August 27, 2019 with an offer to grant Rs 210 billion financial amnesty to big businesses including fertilizer, general industry, power generation companies, K-Electric and CNG sector. However, due to the pressure of opposition parities and the media, the ordinance was withdrawn on September 5. The GIDC Act was approved by the National Assembly in December 2011 imposing cess on gas consumers, other than the domestic sector, to develop infrastructure for a number of projects including Iran-Pakistan Pipeline Project, Turkmenistan Afghanistan Pakistan India (TAPI) Pipeline Project, development of infrastructure of Liquefied Natural Gas (LNG) and for price equalization of imported alternative fuels including LPG (Liquefied Petroleum Gas).
Sources said that Inter State Gas Systems (Private) Limited (ISGS) mandate to oversee the import of transnational gas pipelines into the country has been released $ 4.1 million from GIDC for payment of TAPI Company. Turkmen Gas Company being the consortium leader for the TAPI project is to contribute up to 85 percent of equity, and the rest of TAPI members namely Afghanistan, Pakistan and India would take 5 percent each equity share in the project company. No funds for other pipeline projects were allocated from GIDC since imposition of GIDC, sources said.
Previous Government of PML-N government used the funds generated through the imposition of the GIDC to bridge the fiscal deficit. In January 29, 2016, the Economic Coordination Committee (ECC) gave approval to charge gas consumers Rs 101 billion to partly finance RLNG pipeline network. Despite the opposition of Oil and Gas Regulatory Authority (OGRA) the government recovered Rs 101 billion from consumers through tariff, arguing that the pipeline projects should be financed out of GIDC already being collected from consumers.
Petroleum Division statistics submitted to the National Assembly, as of end of December 2018, revealed that total principal liabilities of these sectors stood at Rs 416.3 billion. Total GIDC collection since 2012 stood at Rs 701.5 billion by December 2018 and Rs 285 billion had been deposited.
Under provisions of sub-section 3 of Section 3 of the GIDC 2015 Act, the defaulters, both gas consumers and gas companies, were liable to pay mark-up at the rate of 4 percent plus three-month Kibor with effect from July 2015.
GIDC had been imposed in 2011-12 and immediately became controversial after the industrialists took the government to court. In April 15, 2015, in a review petition of federal government, the apex court clarified that the collection of the then over Rs145 billion under GIDC Act was not liable to be refunded to industrial consumers of gas from whom it was recovered. The then GIDC law had legalised the cess recovery from non-domestic consumers, mainly industries. Earlier on August 2014, the court suspended collection of GIDC. During last financial year 2018-19, GIDC's actual collection stood at just Rs25 billion against the target of Rs100 billion, following stay orders from courts. For the current fiscal year, the government has set Rs30 billion target for GIDC collection.
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