Ordinance to bail big GIDC defaulters out

ISLAMABAD: The government has decided to promulgate a presidential ordinance, allowing big defaulters of GIDC (Gas Infrastructure Development Cess) to pay just 50 percent of total amount of Rs415 billion that had to pay.

The big defaulters will now pay over Rs200 billion to the government.

A top official of the Petroleum Division confirmed the development, saying the federal cabinet had given approval in this regard.

He said since Parliament was not in session, the decision will be enforced through a presidential ordinance, which may be promulgated very soon.

Asked if it was a kind of amnesty [to these big defaulters], the official said since they had secured stay orders from courts and the government was in dire need of revenue, the defaulters were given relief so that they took their cases back.

Confirming the development, Petroleum Division spokesman Additional Secretary Sher Afgan said the government wanted payments from the general industry, fertilizer, and CNG sector in the head of GIDC.

The GIDC was factually imposed during the Zardari regime to generate funds for future gas pipelines and government-owned LNG projects, but the PML-N government used the amount accumulated in the head of GIDC in budget financing.

The official said the general industry, fertilizer and CNG had emerged as the major defaulters of GIDC, but they refused to pay and moved courts.

At one time, the gas-based electric power generation companies (Gencos) were also defaulters, but they paid the whole GIDC later on.

However, the fertilizer, textile and CNG sectors were among the major defaulters, which received more than Rs415 billion from customers on account of GIDC but did not to pay to the government after obtaining stay orders from courts.

The poor farmers who had paid Rs120 billion in GIDC to the fertilizer industry will be the real victims of the government decision.

Under the presidential ordinance, the GIDC rate will also be reduced.

Both the CNG sector and general industry are to pay Rs80 billion each.

The official said the GIDC issue started eight to nine years back when it was imposed on the general industry, CNG, fertilizer and gas-based power plants.

He said some people moved court, arguing that it was illegal cess in the presence of GDS (Gas Development Surcharge).

In 2015, the court gave its verdict saying the GIDC could not be part of the finance bill and the government should come up with a separate bill to get it passed through Parliament, and the government did so. Even then some people got stay orders and did not pay the amounts in the head of GIDC.

Last year, in September-October, an amendment to the bill was introduced under which the GIDC rate will be reduced but the general industry, fertilizer and CNG sectors while making payments of Rs200 billion will have to pay GIDC at old rates and after that they will start paying reduced rate.