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September 21, 2020

Govt process to recover Rs517b GIDC amount hits snags

Top Story

September 21, 2020

ISLAMABAD: The process that the Petroleum Division initiated to recover Rs517 billion collected by various sectors of economy in the head of GIDC (Gas Infrastructure Development Cess) has hit snags, as all the players such as industrial, fertilizer, CNG and captive power plants have submitted their petitions to the Supreme Court for review of its decision.

“Now under the new scenario, the government will re-initiate the stalled process to recover the GIDC amount till the apex court takes the final decision, a senior official in the Petroleum Division told The News.

The official said the government had initiated the recovery process as per SC judgment issued on August 13, 2020 and it wanted to recover from all economic players over Rs21 billion per installment.

The Supreme Court had asked the government to recover the GIDC amount of Rs417 billion, which has increased to Rs517 billion in 24 equal installments from August 1, 2020.

For the month of September, the gas utilities raised the bills with GIDC amount, but because of the review petitions and stay order by high courts, all the bills with the GIDC amount have been declared null and void.

The official said the fertilizer sector owed Rs195 billion to the government, power sector Rs76 billion, captive power houses, CNG and industrial sector need to pay Rs246 billion in the head of GIDC.

All the players moved the Peshawar, Sindh and Lahore high courts and managed the stay on the process to recover the GIDC amount. In addition, some players have also submitted their petitions to the Supreme Court seeking review of the decision the apex court announced earlier on August 13, 2020.

The export industry moved the court pleading that the government wanted to recover Rs200 GIDC per MMBTU gas for captive power plants, but the captive power plants fall in the industrial sector for which the GIDC stands at Rs100 per MMBTU. Industry wants Captive Power Plants should be treated as an industrial sector.

Fertilizer sector says if the government wants to recover GIDC, then they will have to increase the price of fertilizer by Rs400 per bag. Engro and Fatima fertilizer are already in the court.

CNG sector has also submitted its review petition. The economic players sought from the Supreme Court more increase in installments for payment of GIDC amount pleading that the economy had suffered a lot because of the COVID-19 and the said sectors are still striving hard just to survive.

The government imposed Rs400 per bag of fertilizer as GIDC, but the fertilizer sector representatives claim that it just passed Rs74 out of Rs400 onto fertilizer consumers and did not pass on to consumers the remaining amount of Rs324 and continued selling the fertilizer bag at Rs2000. And if the government wants to recover the full amount of GIDC, the fertilizer sector will be left with no option but to increase the fertilizer price by Rs400 per bag.

CNG sector sought for grant of relief saying the operation of the impugned demand notices may kindly be suspended and no coercive action shall be taken against the CNG stations including the discontinuation of the gas supplies till the final disposal of their writ petition.

It is pertinent to mention that Director Technical of Directorate General of Gas on behalf of the Petroleum Division earlier wrote a letter on August 19, 2020 (Wednesday) to the managing directors of Sui Southern, Sui Northern, Pakistan Petroleum Limited, OGDCL and Mari Gas Companies to initiate the recovery of arrears amounting to Rs417 billion accrued up to July 31, 2020 in 24 installments from all defaulting consumers from August 1, 2020. Now the whole process to recover the amount has been stalled.

The GIDC amounting to Rs295 billion is already lying with the Finance Division and the financial managers of the incumbent government during the hearings in Supreme Court had given the undertaking whenever Petroleum Division asks for the release of the amount of Rs295 billion will be sanctioned to the gas companies for building the gas pipeline.

Right now the government wants to build the North-South gas pipeline which will be dedicated for the transportation of RLNG from Karachi to Lahore.

The PPP-led government had imposed in its last rule the GIDC to generate the financial resources for the gas development infrastructure in the country including the proposed IP and TAPI gas pipelines, but the Nawaz-government instead of using the GIDC amount in building the RLNG-1 and RLNG-2 gas pipelines, refused to provide the GIDC amount, rather it had decided to use it for budget financing.

The gas companies (SSGC and SNGPL) had to borrow over Rs100 billion from banks for building the existing RLNG pipelines 1 and II.

It is pertinent to mention that the incumbent regime had waived Rs220 billion out of Rs417 billion but because of severe criticism from media persons and opposition, the PTI government had to take back its decision.