Govt plans to waive billions of rupees in cess payment

Published: August 19, 2017
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A major share of the (cess) collection was not deposited with Sui Northern Gas Pipelines and Sui Southern Gas Company for onward payment to the federal government following stay orders from different courts. PHOTO: FILE

A major share of the (cess) collection was not deposited with Sui Northern Gas Pipelines and Sui Southern Gas Company for onward payment to the federal government following stay orders from different courts. PHOTO: FILE

ISLAMABAD: The government has planned to introduce a bill in parliament for making amendments to the Gas Infrastructure Development Cess (GIDC) Act 2015 in an attempt to waive half of the cess arrears worth billions of rupees from the compressed natural gas (CNG) filling stations.

Before tabling the bill in parliament, the cabinet is likely to give the go-ahead for the proposed concession in its upcoming meeting next week.

“CNG industry will pay Rs12 billion, which is half the amount they are required to pay for gas supply to their outlets,” said a senior official of the Oil and Gas Regulatory Authority (Ogra) while talking to The Express Tribune.

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The Ministry of Finance, Ministry of Petroleum and Natural Resources and CNG industry have agreed on this formula for half payment covering the period January 1, 2012 to May 22, 2015.

“We have agreed to pay Rs12 billion on account of GIDC and the finance ministry, petroleum ministry and Ogra have given their consent to the proposed formula,” All Pakistan CNG Association Chairman Ghiyas Abdullah Paracha said.

The National Assembly passed the GIDC Act 2011 to pave the way for the imposition of gas surcharge aimed at generating funds for building gas pipelines. However, the levy was challenged in courts due to various reasons including the argument that GIDC could not be imposed on gas consumers through a money bill.

The GIDC ordinance was promulgated during the tenure of the current government to give legal cover to the levy following amendments through Finance Act 2014.

The Senate chairman constituted a special committee for monitoring the implementation of GIDC Act 2015 and making recommendations to remove anomalies.

A report prepared by the committee was presented in parliament on December 21, 2015 and adopted on March 10, 2016.

The committee recommended that the CNG sector may pay Rs12 billion as the full and final settlement of GIDC and late payment surcharge should not be collected from them.

CNG filling stations, however, had been collecting the cess in the gas sale price in accordance with a notification issued by Ogra. But a major share of the collection was not deposited with Sui Northern Gas Pipelines and Sui Southern Gas Company for onward payment to the federal government following stay orders from different courts.

During negotiations with the government, the CNG industry called unreasonable the gas price for CNG stations notified during the previous Pakistan Peoples Party (PPP) government.

Industry sources said the government accepted the CNG sector’s argument and agreed on a formula under which filling stations would pay half the amount of required cess.

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They said the CNG industry had already paid Rs19 billion in GIDC and would pay Rs12 billion more for the period running from January 1, 2012 to May 22, 2015.

Published in The Express Tribune, August 19th, 2017.

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