Financial misconduct claims in fertiliser sector, CPPs
PHOTO: APP
Government officials are levelling accusations against fertiliser manufacturers, claiming that they are profiting at the expense of farmers while enjoying the benefits of cheaper gas. A recent Economic Coordination Committee (ECC) meeting highlighted a disparity in the intended purpose of supplying natural gas to the fertiliser sector at subsidised rates. While the goal was to provide affordable fertiliser to farmers, the expected trickle-down effect has not materialised, and fertiliser prices in the market continue to rise.
ECC members stressed the urgency of reviewing gas prices for the fertiliser sector, emphasising the need for a more equitable distribution of benefits to farmers. Additionally, fertiliser manufacturers are accused of withholding multibillion rupees owed to the government on account of Gas Infrastructure Development Cess (GIDC), funds originally received from farmers. The GIDC payments, intended to contribute to mega pipeline projects such as TAPI, IP, and the Pakistan Gas Stream project, have allegedly been pocketed by fertiliser manufacturers. Legal battles surrounding the GIDC issue have resulted in stay orders from lower courts, preventing the payment of outstanding amounts exceeding Rs400 billion.
The Supreme Court took suo moto notice when the PTI government waived off 50% of the total outstanding amount against fertilisers and textile millers. Fertiliser manufacturers are also accused of distributing dividends to shareholders without fulfilling their tax obligations to the government, adding another layer to the complex financial web.
Read: Fertiliser sector seeks delay in axle load regime
Captive Power Plants (CPPs) face scrutiny
CPPs, particularly their energy efficiency and gas supply practices, are under scrutiny, revealing alleged irregularities in their operations. Despite their inefficiency, CPPs continued to receive discounted gas, influenced by the monopoly of textile millers who own them. The government's decision during the previous PTI government to conduct an energy efficiency audit of CPPs faced resistance, with legal cases filed by textile millers.
In 2021, a decision was made to halt gas supply to CPPs, a move yet to be implemented. The ECC members stressed the importance of pursuing court cases against CPPs to address alleged irregularities. Textile millers, who own CPPs, are also accused of benefiting from electricity at discounted rates, adding another layer to the alleged financial misconduct within the sector.
The ECC was informed that gas supplied to these plants was already blended gas. Despite this, there was a consensus that a clear road map on the issue of gas supply to CPPs should be established, with a separate summary to be moved by the Petroleum Division.
Published in The Express Tribune, November 24th, 2023.
Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.