Govt yet to award north-south gas pipeline projects

ISLAMABAD: The government has not awarded the mega pipeline project spanning from Karachi to Lahore to any country, the petroleum ministry said on Saturday.

The petroleum ministry said north-south gas pipeline projects have not been awarded to any country.

In January 2015, the then government approved the north-south gas pipeline project to improve capacity of the existing gas infrastructure to transport additional large volume of gas supplies through over 1,100 kilometres from southern to northern regions of the country.

The government is expected to start the project after the apex court directed businesses to pay off outstanding gas infrastructure development cess (GIDC).

“The ministry of petroleum is actively considering all options to launch the north-south gas pipeline and other projects by evaluating all possible options including international joint ventures,” the ministry said.

Earlier this month, the Supreme Court issued the verdict on the issue of levy of GIDC and directed full recovery of GIDC payable from industries.

GIDC was levied in 2011 by the then federal government. Its objective was to gather fund for different energy projects, including Iran-Pakistan and Turkmenistan-Afghanistan-Pakistan-India pipelines, LNG import and LPG supply enhancement projects.

Analysts said overall there will be a cash outflow of Rs456.9 billion from industries in the aftermath of the judgment.

The ministry said the judgment will not negatively affect the economy.

“The apex court judgment is a win-win case for both the government and the industry as it gives an opportunity of six months to the government to start gas infrastructure development projects by utilising the amount,” it said. “At the same time the judgment has not only stopped collection of further cess till the already collected amount is expended but it has waived the late payment surcharge and even allowed 24 monthly installments to the industry to pay back the outstanding amount.” The GIDC was declared unconstitutional by the Peshawar High Court on in 2013, and the judgment was also upheld by the Supreme Court in 2014. Later, the then government brought a new legislation on the issue in 2015. In 2016, the Supreme Court declared the GIDC as ultra vires of the constitution.

Last year, an ordinance was promulgated to waive half of the outstanding liabilities – amounting to Rs208 billion. Through the presidential ordinance, the federal government also reduced GIDC rates by up to 75 percent. However, the government withdrew the GIDC ordinance within days of its promulgation.