GIDC collection: SC seeks report about money spent on gas projects

The federal government has been directed to submit how much money, collected under Gas Infrastructure Development Cess (GIDC) has been spent on gas projects and what is the ground situation of the various projects.

According to Gas Infrastructure Development Cess (GIDC) Act, 2015 the cess shall be utilized by the federal government in connection with infrastructure development of Iran Pakistan (IP) Pipeline Project, Turkmenistan-Afghanistan-Pakistan-India (TAPI) Pipeline, LNG or other ancillary projects.

A three-member special bench, headed by Justice Mushir Alam, on Thursday heard 107 petitions/appeals of various textile mills, cotton mills, sugar mills, ceramics companies, chemicals, CNG filing stations, match factories, cement companies and aluminum industries regarding GIDC levy.

Mobin Saulat MD/CEO of M/s Inter State Gas System (ISGS) Limited, appearing on bench directive, informed that the total development and construction costs to be funded through GIDC for Iran-Pakistan Gas Pipeline project is $1,806.06 million. The project development and operational costs were funded by Government Holding Private Limited (GHPL), the parent company of ISGS. The construction of the project will take 36 months after construction contract, subject to easement of international sanctions on Iran. He informed that the legally binding agreement is still in place and Pakistan is still committed to the project.

About Turkmenistan-Afghanistan-Pakistan-India (TAPI) that under the agreement the Consortium Leader of TPCL will inject 85 percent of equity part in TPCL, while the rest of the TAPI members share 5% each of the equity. The project is in the development stage and the government is doing the price review, which would be done in 5-6 months, while will be completed in three years. Pakistan has paid $200 million in equity and $100 million required as development charges.

The Peshawar High Court (PHC) on May 31, 2017, had rejected a set of petitions challenging the validity of the GIDC Act 2015 on the grounds that the transgression of legislative authority by the federation does not qualify as a breach of fundamental rights of citizens and therefore the petitioners before the high court were not aggrieved persons within the meaning of Article 199 of the Constitution and thus have no locus standi to challenge the validity of the act.

The PHC in its judgement had also held that when Article 142 (a) read with Article 154 of the Constitution, it became evident that the parliament had the exclusive authority to legislate on Entries in Part II of the Federal Legislative List of the Constitution.

In April 15, 2015, the apex court rejected the federal government's petition seeking review of its August 22, 2014 verdict and clarify that the collection of then over Rs100 billion under GIDC Act was not liable to be refunded to the industrial consumers of gas from whom it was recovered.

The then GIDC law had legalised the cess recovery from the non-domestic consumers, mainly industries.