Cement makers demand removal of GIDC

KARACHI: Cement manufacturers on Saturday demanded the government to abolish gas infrastructure development cess (GIDC), as it increased the cost of doing business of the cement sector.

All Pakistan Cement Manufacturers Association (Apcma) Chairman Mohammad Ali Tabba said that in the current market scenario of declining fuel prices, including liquefied natural gas in the international markets, GIDC will make domestic products uncompetitive in the export markets.

The government had enacted the Gas Infrastructural Development Act of 2011 (2011 Act), whereby the government charged a cess to all gas consumers except those of the domestic sector. 

The act was subsequently challenged and held to be ultra vires to the Constitution of Pakistan and the Supreme Court also declared that cess is a 'fee' not a 'tax' and that all amounts charged under the 2011 act were to be refunded and / or adjusted in monthly bills within six months of
 the judgment ie, August 22, 2014.

Subsequently, the government promulgated the Gas Infrastructural Development Ordinance 2014 (2014 Ordinance), which via Section 8 of the 2014 Ordinance attempts to make all amounts collected under the 2011 act to be validly collected.

The 2014 Ordinance was originally to expire in January 2015, but was extended by the National Assembly till May 2015. In May, the government passed the GIDC Act 2015.

A case was filed in the Sindh High Court (SHC), challenging the levy of GIDC, as well as its retrospective effect.

The SHC granted a stay against charging GIDC under the 2015 Act on the first date of hearing. 

Moreover, Tabba demanded that the recent increase in the duty on the import of coal from one percent to six percent has adversely hit the local manufacturers and has drastically increased the cost of doing business.

“This latest increase in the import duty on coal should be reduced to zero percent, as this would keep open the option of using coal as an alternative source of energy,” Tabba said.

Cement production capacity in Pakistan has touched 45.618 million tons per annum and 81 percent of this capacity is situated in the North and 19 percent in the South.