Govt weighs options to recover Rs447bn Gas Infrastructure Development Cess

Published December 27, 2022
Finance Minister Ishaq Dar chairs a meeting on Gas Infrastructure Development Cess in Islamabad on Monday. — PID
Finance Minister Ishaq Dar chairs a meeting on Gas Infrastructure Development Cess in Islamabad on Monday. — PID

ISLAMABAD: The government on Monday decided to use all the administrative and legal resources to recover Rs447 billion Gas Infrastructure Development Cess (GIDC) from commercial and industrial entities which had blocked due payments through high courts despite standing orders of the Supreme Court of Pakistan for recoveries.

The decision was taken at a GIDC meeting presided over by Finance Minister Ishaq Dar. Minister of State for Finance and Revenue Dr Ayesha Ghous Pasha, Minister of State for Petroleum Musadik Masood Malik, SAPM on Finance Tariq Bajwa, Secretary Finance, Deputy Attorney General and managing director of OGDCL and representatives of SNGPL, SSGCL and PPL attended.

The meeting was told about the amounts outstanding against various entities and discussed GIDC Act and Supreme Court’s order. It was reported that about Rs447.5bn was still outstanding and needed to be recovered but 3,194 petitions in various high courts were hampering the recovery of about Rs420bn.

It was noted that the Supreme Court in its decision of August 2020 while dismissing all appeals into the GIDC had very clearly ordered recovery of all GIDC accrued by 2020-21 and then suspended future GIDC till such time cess was utilised including collected at the time and due but not yet collected till then was recovered.

Dar resolves to retrieve every penny from defaulters

As a relaxation to various sectors, the apex court had, however, ordered that all GIDC dues as of July 31, 2020, be recovered by the government in 24 installments without a late payment surcharge. At the same time, the court also allowed a late payment surcharge for the delays in payment of “any of the 24 installments”.

However, a total of 3,194 litigants blocked those payments on procedural grounds in various high courts. At present, about 2,099 suits are pending against Sui Southern Gas Company regarding GIDC recovery in Sindh High Court (SHC), followed by another 1,087 suits against Sui Northern Gas Pipelines Ltd (SNGPL) in Sindh, Lahore and Peshawar High Courts and eight suits in SHC against Mari Petroleum and OGDCL.

“Examining the court’s decisions and stay orders, the finance minister expressed serious concerns over the non-recoveries of GIDC dues and expressed the resolve of the government to recover each penny from the defaulters,” said an official statement.

He directed the authorities to share an updated break-up of arrears of sector-wise GIDC in the next meeting to frame up legal and administrative strategy for fast-track recovery of the outstanding dues.

The sources said the government could also lose powers to collect GIDC and the GIDC law would stand annulled in case of failure of the government to carry out development projects like pipelines from Turkmenistan, Iran, or from Karachi to Lahore subject to the conducive international and political environment.

Informed sources said the gas companies could consider using administrative and technical means like reducing pipeline pressure for various sectors to force them to pay their dues besides hiring external legal counsels with fixed and performance fees linked with the proportionate recovery of GIDC arrears to conclude the court cases against chronic defaulters. An out-of-court settlement would be another option like a similar dispensation earlier given to the CNG sector for partial payment of dues besides adjustments against their various refunds and subsidy claims.

According to the Petroleum Division, total GIDC payable by various sectors stood at Rs796bn of which Rs349bn had been received by the government. After clearance of earlier dues of Rs349bn by all sectors, the remaining amounts payable by fertiliser sector now stood at Rs191bn, Rs82bn by CNG, Rs98bn by industry (including Rs54bn of capital power, Rs21bn of general industry and Rs23bn against textiles) followed by Rs39bn against K-Electric.

Published in Dawn, December 27th, 2022

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