FAISALABAD: The government has increased 14 times the Gas Infrastructure Development Cess (GIDC) it will ‘bankrupt’ industrialists of the textile sector as they cannot pay the huge tax amid energy crisis, high cost of doing business which is leading to decline in exports and un-competitiveness in the international market.

Mushtaq Ahmed, attached with a textile mills, said the PPP government had introduced the GIDC in 2011 through an act titled “Gas Infrastructure Development Cess Act 2011”.

In this act, he said the government had imposed only Rs13 GIDC per mmbtu, but the present regime had increased it to 14 times and millers are being forced to pay Rs200 per mmbtu.

“People at the helm of affairs are well aware of the situation of the industry which is already struggling for survival because of the energy crisis. The imposition of the GIDC will worsen the situation and millers will be left with no option but to close their units,” he said.

He said regional rivals of Pakistan were facilitating the industry through affordable rates of utilities.

Quoting examples, he said the industry was getting gas in India at 4.66 dollars per mmbtu, Bangladesh 1.86 dollars, Sri Lanka 3.66 dollars and Vietnam 4.33 dollars as against 4.80 dollars in Pakistan. After imposition of GIDC, it will increase to 6.27 dollars per mmbtu.

All Pakistan Textile Mills Association chairman SM Tanvir said with the imposition of the GIDC the captive industry would have to pay Rs31 billion instantly that would lead to complete closure.

He said the government would charge the GIDC retrospectively and industrialists were not in a position to do so.

He said the GIDC bill was badly drafted which introduced two rates, one for the industry and other for the captive industry, adding that industrialists had been paying bills of both categories. “Nobody is ready to pick the phone call of industrialists to clarify the categories of industries,” he added.

An industrialist, requesting anonymity, said the textile in Punjab had already been facing numerous problems because of the power crisis that put colossal financial burden on them. “Now imposition of the GIDC will also force every big unit to pay in millions that will not possible for them,” he said.

Clarifying how units would go bankrupt, the industrialist said they had been facing problems of cash flow, high cost of doing business, high rates of electricity and gas as compared to regional rivals, sharp decline in exports due to dollars depreciation and pending of refunds worth billions of rupees with the FBR.

He said that industrialists had been paying the GIDC easily in 2011 because its rate was reasonable, but several people had gone to court when the government increased the rates manifold.

The rulers have now introduced separate rates for the captive (an industry that produces electricity through gas for its own consumption) and the general industry. The captive industry will pay 7.60 dollars with GIDC and the general industry will pay 6.27 dollars.

He said that industrialists could not understand as to why the captive industry was being penalized who, sensing the energy crisis in Pakistan, had spent billions on the equipment to produce electricity so that their business cycle should not be disturbed.

“Why cement and commercial, including ice factories, have been exempted from the GIDC. Why only Rs100 per mmbtu will be received as GIDC from the independent power plants, Wapda, KESC and Gencos which are earning millions daily,” he questioned.

Mohsin Aziz, the chairman of the committee on textile industry and attached with the PTI, said the government had formed a committee comprising members of all political parties to decide the GIDC issue.

He said the government had assured them that it would not receive GIDC retrospectively. He said neither the government could collect the GIDC retrospectively nor industrialists were in a position to pay such a huge money.

Mr Aziz was not sure when a committee meeting would be convened, but he said the committee had been given about one-and-a-half months to take up reservations of industrialists.

He said the government would neither send any person for collection of the GIDC nor connection of any industry would be severed.

Published in Dawn, May 23rd, 2015

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