Powerful industries seek 50% cut in GIDC payment
Owe billions to govt as they have already received tax from consumers
The previous PML-N government had exempted CNG station owners from depositing 50% of the collection and now other sectors are also demanding the same concession from the current PTI government. PHOTO: FILE
ISLAMABAD:
The government may opt for waiving the outstanding gas infrastructure development cess (GIDC), imposed on gas consumers, as powerful lobbies seem reluctant to deposit the tax in state coffers and have come up with different proposals for an out-of-court settlement.
Compressed natural gas (CNG) filling stations, fertiliser manufacturers and textile barons have collected around Rs300 billion from the gas consumers but they have not deposited the amount in government coffers and have obtained stay orders from courts.
According to officials, in a series of meetings held at the Ministry of Finance, these powerful lobbies asked the government to waive 50% of the collection, amounting to Rs150 billion. The previous Pakistan Muslim League-Nawaz (PML-N) government had exempted CNG station owners from depositing 50% of the collection and now other sectors are also demanding the same concession from the current Pakistan Tehreek-e-Insaf (PTI) government.
Officials revealed that the finance ministry also discussed the proposal of removing the GIDC from major sectors. In another proposal, the fertiliser and CNG sectors have offered to pay all the due cess in installments. The Pakistan Peoples Party (PPP), during its 2008-13 tenure, had imposed the GIDC on consumers such as fertiliser, captive power and CNG units in a bid to raise funds for laying gas pipelines including the Iran-Pakistan, Turkmenistan-Afghanistan-Pakistan-India (Tapi) and liquefied natural gas (LNG) pipelines.
Later, the PML-N government, during its five-year term, collected over Rs300 billion in GIDC but it was not spent on the pipelines. It consumed the money in projects like Metro bus and Orange Line train.
Sources told The Express Tribune that the CNG and fertiliser sectors had to pay Rs200 billion to the government on account of GIDC. Of that, the fertiliser industry had to pay Rs120 billion whereas the CNG stations owed Rs80 billion.
These two sectors have now offered the government to deposit the amount in 18 to 20 installments. Captive power plants of the textile industry had to pay Rs80 billion.
The largest amount is owed by the fertiliser industry. The PTI government recently increased gas prices for the industry, resulting in an increase in urea prices for the farmers.
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The previous PML-N government had allowed the fertiliser industry the export of urea, which earned them billions of rupees. “The current government, after coming to power, started a probe but could not succeed,” an official commented.
The textile industry was another major defaulter, which had got a stay order from court. Apart from this, Petroleum Minister Ghulam Sarwar Khan complained at a press conference recently that the industry was involved in huge gas theft in the country. Despite that, the current government has announced a Rs25-billion subsidy for captive power plants of the textile industry.
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Similarly, the CNG sector was receiving billions of rupees from the consumers in GIDC but it was not depositing the collection in the national exchequer as it had obtained a stay order. Officials recalled that the CNG sector and the PML-N government had entered into a deal under which the latter waived 50% of GIDC by 2015. However, the sector has not released the GIDC after that and has to pay Rs80 billion.
The GIDC was meant to build the gas pipelines but the PML-N administration forced public gas utilities to borrow over Rs100 billion from commercial banks in order to build an LNG pipeline from Karachi to Lahore and it did not spend the money from the collection.
Published in The Express Tribune, January 22nd, 2019.
The government may opt for waiving the outstanding gas infrastructure development cess (GIDC), imposed on gas consumers, as powerful lobbies seem reluctant to deposit the tax in state coffers and have come up with different proposals for an out-of-court settlement.
Compressed natural gas (CNG) filling stations, fertiliser manufacturers and textile barons have collected around Rs300 billion from the gas consumers but they have not deposited the amount in government coffers and have obtained stay orders from courts.
According to officials, in a series of meetings held at the Ministry of Finance, these powerful lobbies asked the government to waive 50% of the collection, amounting to Rs150 billion. The previous Pakistan Muslim League-Nawaz (PML-N) government had exempted CNG station owners from depositing 50% of the collection and now other sectors are also demanding the same concession from the current Pakistan Tehreek-e-Insaf (PTI) government.
Officials revealed that the finance ministry also discussed the proposal of removing the GIDC from major sectors. In another proposal, the fertiliser and CNG sectors have offered to pay all the due cess in installments. The Pakistan Peoples Party (PPP), during its 2008-13 tenure, had imposed the GIDC on consumers such as fertiliser, captive power and CNG units in a bid to raise funds for laying gas pipelines including the Iran-Pakistan, Turkmenistan-Afghanistan-Pakistan-India (Tapi) and liquefied natural gas (LNG) pipelines.
Later, the PML-N government, during its five-year term, collected over Rs300 billion in GIDC but it was not spent on the pipelines. It consumed the money in projects like Metro bus and Orange Line train.
Sources told The Express Tribune that the CNG and fertiliser sectors had to pay Rs200 billion to the government on account of GIDC. Of that, the fertiliser industry had to pay Rs120 billion whereas the CNG stations owed Rs80 billion.
These two sectors have now offered the government to deposit the amount in 18 to 20 installments. Captive power plants of the textile industry had to pay Rs80 billion.
The largest amount is owed by the fertiliser industry. The PTI government recently increased gas prices for the industry, resulting in an increase in urea prices for the farmers.
PTI govt to expeditiously pursue IP gas pipeline project
The previous PML-N government had allowed the fertiliser industry the export of urea, which earned them billions of rupees. “The current government, after coming to power, started a probe but could not succeed,” an official commented.
The textile industry was another major defaulter, which had got a stay order from court. Apart from this, Petroleum Minister Ghulam Sarwar Khan complained at a press conference recently that the industry was involved in huge gas theft in the country. Despite that, the current government has announced a Rs25-billion subsidy for captive power plants of the textile industry.
Market watch: Stocks surge over 900 points in first session of year
Similarly, the CNG sector was receiving billions of rupees from the consumers in GIDC but it was not depositing the collection in the national exchequer as it had obtained a stay order. Officials recalled that the CNG sector and the PML-N government had entered into a deal under which the latter waived 50% of GIDC by 2015. However, the sector has not released the GIDC after that and has to pay Rs80 billion.
The GIDC was meant to build the gas pipelines but the PML-N administration forced public gas utilities to borrow over Rs100 billion from commercial banks in order to build an LNG pipeline from Karachi to Lahore and it did not spend the money from the collection.
Published in The Express Tribune, January 22nd, 2019.