Outstanding GIDC against business magnates piling up

Tycoons continue to collect cess from consumers, but fail to deposit it in govt accounts

ISLAMABAD: The outstanding gas infrastructure development cess (GIDC), to be paid by business tycoons, has piled up as implementation of a relief package has been delayed.

The government of Pakistan Tehreek-e-Insaf (PTI) had announced a relief package for the GIDC defaulters including compressed natural gas (CNG) filling stations, independent power producers (IPPs), textile and fertiliser manufacturers by waiving 50% of the outstanding cess. The relief was announced in the second mini-budget brought by the PTI government in January this year.

At that time, “the outstanding GIDC amounted to Rs416 billion, which has now piled up to Rs452 billion,” an official said, revealing that the defaulters did not opt for the scheme, but they continued to collect the cess from consumers and did not deposit it in government accounts.

GIDC was introduced by the Pakistan Peoples Party (PPP) government, during its 2008-13 tenure, in a bid to raise money for laying gas pipelines, but later the Pakistan Muslim League-Nawaz (PML-N) government spent the collected cess on road projects.

“A huge amount also went into the pockets of business tycoons, who got stay orders from courts against the imposition of GIDC, but continued to receive the tax from consumers,” the official said.

Officials of the Petroleum Division informed the Economic Coordination Committee (ECC), in a recent meeting, that Rs289 billion was collected on account of GIDC from the industry, captive power plants, IPPs, K-Electric, power generation companies, CNG stations and fertiliser plants during the period January 2012 to February 2019 against the total outstanding amount of Rs741 billion.

Now, about Rs452 billion is outstanding. However, according to officials, court cases involving Rs382 billion have been filed by different consumers.

Giving details of the court cases, Petroleum Division officials told the meeting that six cases were filed in the Supreme Court and 14 in the Islamabad High Court. Apart from these, 200 lawsuits and two appeals were filed in the Sindh High Court. Similarly, nine writ petitions were filed in the Peshawar High Court and more than 10 writ petitions were submitted in the Lahore High Court.



According to salient features of the GIDC Amendment Act 2019, out-of-court settlement for litigants and 50% waiver of cess held up due to protracted litigation can be offered. The government will also grant waiver on interest rate to all consumers till the enactment of legislation and signing of a settlement agreement by the consumers with the respective gas utility within 90 days of the enactment of the law.

Option will be given to the consumers for non-cash settlement of GIDC arrears against general sales tax (GST) claims, subsidy claims and Drawback of Local Taxes and Levies (DLTL) claims with the Federal Board of Revenue (FBR) after signing of a settlement agreement with the respective gas company.

Payment can be made in two installments - first within 30 days of the signing of a settlement agreement and second within three months of the inking of the settlement agreement.

A one-off opportunity will be given to CNG stations which could not avail of dispensation under the GIDC Amendment Act 2018. Consumers, who fail to pay second installment, will have to pay maximum cess. Consumers, who do not wish to enter into any settlement agreement, will be pursued in the respective court of law for full recovery of the outstanding GIDC.

The Petroleum Division told the ECC that the Finance Division supported the proposed amendments to the GIDC Act. The draft of the GIDC Amendment Act 2019 has been sent to the Law and Justice Division for vetting.

The ECC directed the Petroleum division to submit the proposed GIDC Amendment Act 2019 for consideration of the Cabinet Committee on Legislative Cases after vetting by the Law and Justice Division.

Published in The Express Tribune, April 30^th, 2019.

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