The National Assembly Standing Committee on Tuesday approved the amended Gas Infrastructure Development Cess (GIDC) bill, 2014, to give a legal cover to the Rs 95 billion revenue collection target. The meeting was held with Chaudhry Bilal Ahmed Virk in the chair. The bill was opposed by Muttahida Qaumi Movement (MQM) and Pakistan Tehreek-e-Insaf (PTI), while Pakistan People Party (PPP) parliamentarians did not attend the meeting.
Defending the Cess Bill, Federal Secretary Finance Dr Waqar Masood argued that to bridge the widening gas supply gap, a number of gas import projects were being perused including the Iran-Pakistan (IP) pipeline project, Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline project, LNG import projects and LPG supply enhancement project, in public as well as private sectors. He added that in case the required infrastructure was not developed for the abovementioned projects, the government would be forced to import liquefied fuels which are much costlier as compared to gas. Further, Pakistan would also be exposed to payment of liquidated damages or payments as agreed in Gas Sales Purchase Agreement executed with Iran. According to him, presently, neither the federal government nor any gas utility has adequate funding to implement the above project. To create the required infrastructure it was therefore, proposed that a new Cess may be imposed thorough an Act of the Parliament, the Secretary Finance maintained.
The Committee constituted a sub-committee on the issue of Exploration and Production Companies (E&P) under the convenership of Chaudhry Bilal Ahmed Virk; to investigate the matter of unnecessary extension granted to defaulting E&P companies. Abdul Wasim from MQM and dissident Nasir Khatak from PTI opposed it by saying that it was a type of an 'advance tax' which was unjustified to be collected from the consumers to implement those gas pipeline projects which were only on paper.
After introducing it in 2011, 3500 cases were filed against government and Supreme Court had also given order against its imposition, arguing that it was a fee and not a tax. The government had now introduced the Gas Infrastructure Development Cess Bill 2014 to give a legal cover to the collection of cess from gas consumers. National Assembly Standing Committee on Petroleum and Natural Resources which met here with Chaudhry Bilal Ahmed Virk in the chair approved the bill with a majority of votes.
Petroleum Minister Shahid Khaqan Abbasi said that Pakistan People's Party (PPP) had taken an initiative to impose GIDC on gas consumers to finance gas import projects. He said that PPP, MQM and even PML had supported it to finance gas import projects. He maintained that gas companies required Rs 300 billion to lay a domestic gas pipeline and IP gas pipeline project needed a Rs 200 billion funding. He said that only gas consumers would be paying it. "If government indulges in deficit financing, it will burden the common man," he said. He said that government was ready to invest Rs 6 billion to provide gas meters in KPK but had sought guarantee of bills collection. He said that KPK government had nominated Asad Umar to sort out the issue of gas theft.
Member committee Nasir Khatak said that government had kept cess open-ended which could be imposed on any sector. He said that it was an advance tax which would throw up an opportunity for government to impose water surcharge to generate financing for dams.
Abdul Wasim of MQM said that the government should not keep it open-ended and there should be some limits. He said that there was a huge corruption in Federal Board of Revenue (FBR) and government should end it to generate money. Rana Afzal supported the proposal of setting its limits.
Secretary Finance Dr Waqar Masood protested over terming it an advance tax and said that they would provide funds whenever required to finance gas import projects. He said that National Assembly had approved it and money could be used for LNG import and other imported gas projects, including the IP and the TAPI.
Director General Petroleum Concession (DGPC) Petroleum Ministry Saeed-ullah Shah said that show-cause notices had been issued to 20 companies to cancel for failure to meet deadlines of exploring oil and gas. He said that the process of serving notices on eight more companies was under way. He said that license of one company had been cancelled. The parliamentarians expressed strong reservations over grant of extensions to those exploration companies that had not been able to start exploration for the last several years.
Shah said that there was no provision to penalize defaulted oil and gas exploration companies in present regime. He said that a consultant had been hired to amend present rules with a view to penalizing those companies that fail to meet deadlines. The management of Oil and Gas Development Company Limited (OGDCL) said that it had no connection with these housing societies and even an advertisement had been given to dissociate it from these societies. The committee decided to hand over this case to Federal Investigation Agency (FIA) to take action against officials of the company who had plundered the money.