Back in 2020, the Supreme Court passed a judgement that allowed the government to recover Rs.453 billion through the Gas Infrastructure Development Cess (GIDC). The directive forced companies to pass the cost onto their consumers but petitions filed in the Sindh and Punjab High Court have granted petitions that stopped this payment on various grounds. Now, the future of gas pipeline development hangs in the balance.
According to the thousands of petitions filed, fertiliser manufacturers—responsible for a majority of the outflow of cash for the GIDC on account of being a major industrial gas consumer—have claimed that they had a fixed gas contract which accounted for all taxes, fees and charges, whether local or federal. They further claimed that on account of not passing the cost onto their consumers, there is no responsibility to deposit the cess. All these grievances were legitimised after lower courts granted the petitions, going against the orders of the SC, and certain clarifications must be given by the government.
The GIDC was implemented on the provision that the government would take the necessary steps to commence work on projects like the NorthSouth gas pipeline, Turkmenistan-Afghanistan-Pakistan-India (Tapi) within six months of the judgement. It has now been two years and the progress achieved is minimal. Given that companies are paying additional taxes to cover the expenses of laying down gas infrastructure, updates on these projects must be given and some development should have taken place by now. Had there been sufficient development in this regard, the gas situation in the country would have been better and these companies might not have insisted on getting out of paying the GIDC.
Clearly, many have lost confidence in the GIDC scheme and the government must provide some clarifications to revive it. Furthermore, the policy should be developed further, addressing the claims being made that excuse certain companies from the GIDC in particular, so that the process is clear and there are no further delays.
According to the thousands of petitions filed, fertiliser manufacturers—responsible for a majority of the outflow of cash for the GIDC on account of being a major industrial gas consumer—have claimed that they had a fixed gas contract which accounted for all taxes, fees and charges, whether local or federal. They further claimed that on account of not passing the cost onto their consumers, there is no responsibility to deposit the cess. All these grievances were legitimised after lower courts granted the petitions, going against the orders of the SC, and certain clarifications must be given by the government.
The GIDC was implemented on the provision that the government would take the necessary steps to commence work on projects like the NorthSouth gas pipeline, Turkmenistan-Afghanistan-Pakistan-India (Tapi) within six months of the judgement. It has now been two years and the progress achieved is minimal. Given that companies are paying additional taxes to cover the expenses of laying down gas infrastructure, updates on these projects must be given and some development should have taken place by now. Had there been sufficient development in this regard, the gas situation in the country would have been better and these companies might not have insisted on getting out of paying the GIDC.
Clearly, many have lost confidence in the GIDC scheme and the government must provide some clarifications to revive it. Furthermore, the policy should be developed further, addressing the claims being made that excuse certain companies from the GIDC in particular, so that the process is clear and there are no further delays.