Rs228b cess on fertilizers, CNG, power sector waived

ISLAMABAD: The PTI government has unbelievably extended the amnesty of Rs228 billion in the head of Gas Infrastructure Development Cess (GIDC) to the inflectional industrialists, and owners of fertilizers, CNG and Captive Power Plants, K-Electric, Gencos and Independent Power Producers (IPPs) through presidential ordinance enforced with immediate effect from August 28, 2019.

According to the copy of the promulgated ordinance, the said players will pay half cess of the outstanding charged from May 22, 2015 to December 21 2018.

However, the future rate of GIDC for fertilizers, CNG and K-Electric, Gencos and IPPs have been reduced to half whereas the rate of cess for textile, carpet, leather, surgical and sports and its captive power plants has been reduced to zero.

According to the relevant senior official in Petroleum Division, the total amount collected by fertilizers, CNG and captive power plants, K-Electric, Gencos and Independent Power Producers (IPPs) in the head of GIDC factually stood at Rs751 billion out of which Rs295 billion was doled out during Nawaz government and that amount has been used for budget financing instead of developing the gas infrastructure and laying down the gas pipelines. The remaining amount was Rs456 billion, that the said sectors were to pay to the government, but astonishingly the PTI government waived the 50 percent amount and the decision has been enforced through the presidential ordinance. The government under the ordinance has also reduced the GIDC rates by 50 percent.

The said amount of Rs751 billion was collected by the said sectors in the last five years from consumers and farmers basically for developing the gas infrastructure and financing the proposed trans-nation gas line such as IP and TAPI, but the said amount was not used and so much so it is not used for the argumentation of gas pipeline between Sui Southern and Sui Northern for the transportation of imported LNG. Instead, out of Rs751 billion, the amount of Rs295 billion has been used by the PML-N government for budgetary support.

President of Pakistan Dr Arif Alvi has accorded approval to the amendment in GIDC Act 2015, the said fertilizers, CNG and captive power plants, K-Electric, Gencos and Independent Power Producers (IPPs) will not pay Rs228 billion out of Rs456 billion already collected by the said players. This clearly means that the government has given huge waiver of Rs228 billion, which is 50 percent of the remaining collected amount and in future for the said players, the rate of GIDC has also been slashed by 50 percent. Under the ordinance, both the gas companies — Sui Northern and Sui Southern would carry out the forensic audit.

The amount of Rs69 billion have been waived for Fatima Fertilizer, Pak-Arab Fertilizer, Engro Fertilizer and other fertilizer companies. The decision to give waiver of 50 percent of the remaining GIDC amount was made by the then finance minister Asad Umar in a meeting with business tycoons of fertilizer, CNG, captive power plants and IPPs and K-Electric. He also managed to get the approval from cabinet in January 24, 2019. The official said that in 2011, the GIDC of Rs100-260 per MMBTU was imposed. The said players continued to collect the GIDC amount from farmers and gas consumers even after moving the court of law and getting the stay. However, another GIDC Act is made in 2015 keeping in view the assertion of Supreme Court. The said players refused to pay the said amount to government but they kept on collecting the GIDC. As per the documents, the government has given a waiver of Rs69 to fertilizer, Rs70 billion to captive power plants, Rs80 billion to CNG, Rs5 billion to IPPs, Gencos Rs28 billion and Rs25 billion to owners of general industry. From 2012 to December 2018, the amount of Rs295 billion under GIDC has been doled out to finance ministry during PML-N government.