ISLAMABAD: The PTI government has incredibly extended the amnesty of Rs228 billion in the head of Gas Infrastructure Development Cess (GIDC) to influential industrialists, and owners of fertilizers, CNG and Captive Power Plants, K-Electric, Gencos and Independent Power Producers (IPPs) through a presidential ordinance enforced with immediate effect from August 28, 2019.
According to the copy of the promulgated ordinance, the said players will pay half cess of the amount collected from May 22, 2015 to December 21 2018. Furthermore, the future GIDC rate for fertilizers, CNG and K-Electric, Gencos and IPPs has also been reduced to half. The ordinance also has reduced to zero the rate of cess for textile, carpet, leather, surgical and sports industries and the captive power plants.
According to a senior official in the Petroleum Division, the total amount collected by fertilizers, CNG and captive power plants, K-Electric, Gencos and Independent Power Producers (IPPs) in the head of GIDC stood at Rs751 billion out of which Rs295 billion was used during Nawaz government for budget financing instead of developing gas infrastructure and laying down the gas pipelines. The remaining amount of Rs456 billion was to be paid to the government, but astonishingly the PTI government waived 50 percent of that amount and the decision to the effect was enforced through an ordinance.
Rs751 billion was collected by these sectors in the last five years from consumers and farmers for developing the gas infrastructure and financing the proposed trans-national gas pipelines such as IP and TAPI. But it was neither used for that purpose nor for improving the gas pipelines between Sui Southern and Sui Northern for the transportation of the imported LNG.
The President of Pakistan, Dr Arif Alvi, accorded approval to the amendment in the GIDC Act 2015. The said fertilizers units, CNG and captive power plants, K-Electric, Gencos and Independent Power Producers (IPPs) will no more have to pay Rs228 billion out of Rs456 billion already collected by them. This clearly means that the government has given a huge waiver of Rs228 billion, which is 50 percent of the collected amount. Besides in future for the said players, the rate of GIDC has also been slashed by 50 percent. Under the ordinance, both the gas companies — Sui Northern and Sui Southern would carry out the forensic audit.
The amount of Rs69 billion has been waived for Fatima Fertilizer, Pak-Arab Fertilizer, Engro Fertilizer and other fertilizer companies. The decision to give the 50 percent waiver was taken by the then finance minister Asad Umar in a meeting with business tycoons of fertilizer, CNG, captive power plants, IPPs and K-Electric. He also managed to get the approval from cabinet in January 24, 2019.
The official said the GIDC of Rs100-260 per MMBTU was imposed in 2011. The big players continued to collect the GIDC amount from farmers and gas consumers even after moving the court of law and getting a stay. However, another GIDC Act was passed in 2015 keeping in view the directions of the Supreme Court. But, these industrial tycoons on one hand outrightly refused to pay the said amount to the government but they also kept on collecting the GIDC.
In a industry-wise break up, the government has given awaiver of Rs69 billion to fertilizer sector, Rs70 billion to captive power plants, Rs80 billion to CNG, Rs5 billion to IPPs, Gencos Rs28 billion and Rs25 billion to the owners of general industry. From 2012 to December 2018, Rs295 billion under GIDC was doled out to the finance ministry by the PML-N government.
The GIDC of Rs300 per MMBTU is imposed on fertilizers as feed, Rs150 per MMBTU on fertilizer as fuel, Rs200 per MMBTU for captive power plants and Rs100 per MMBTU for other industry.
