November 29, 2021

Government Waves Off 50% Arrears Under The GIDC Head; Would Collect Rs 210 BN Instead Of Rs 473 BN

After negotiations between the officials of industries who are part of the Gas Infrastructure Development Cess (GIDC) and delegation of top government officials, led by Asad Umar and Abdul Razak Dawood, the government has agreed to wave off almost 50% of Gas Infrastructure Development Cess (GIDC) bills. GIDC used to be collected from different industries for the development of the imported gas structure. The amount gathered under this head was being utilized for the development of the Iran Pakistan (IP) Gas Pipeline project, Turkmenistan-Afghanistan-Pakistan-India (TAPI) Gas Pipeline project and other such projects. The government argued that they waved off uncertain past bills to assure a stream of low but certain future revenue. GIDC was charged as part of the cost of fertilizers from the farmers and then the amount used to be transferred to the National Treasury. Other industries also used the same practice to pass down the price to the end consumer and later deposit the money to the government treasury.

However, Energy Minister Omer Ayub Khan said that there would be ‘no free lunch’ and the amount was only waved off because the GIDC rates were higher than they should have been. In a news conference, Omer Ayub and Special Assistant to PM on Petroleum Mr. Nadeem Babar, said that the GIDC was waived on a condition that the gas companies would have to open their accounts for audit, to assure that the GIDC collected from farmers is either refunded to the farmers or is deposited in the National Treasury.

Omer further said that “All Industries who are part of the GIDC and are contesting cases in courts would have to formally sign settlement agreements to withdraw their cases from the courts, pay 50% of past arrears within 90 days upfront and avail half of the current GIDC rates in the future.” They also added that those who do not want to avail this option can keep their cases in the courts, but upon settlements of the dispute, they will not be offered half GIDC rates.

Omer further said that some officials are spreading confusion that government will collect Rs210 billion instead of arrears of Rs420 billion, but the government has already collected Rs147 billion during 2011-2014 period and the dispute was on the remaining Rs273 billion, and their payments were uncertain due to stay orders in different high courts. Therefore, we have made certain a steady stream of Rs210 billion by offering this option and avoid the uncertain revenue stream of Rs273 billion.

The government had collected Rs15 billion last year, under the GIDC head from different companies and Omer Ayub has claimed that now we have made sure that the government collects Rs42 billion instead of Rs15 billion per year. However, the government has set a target of collecting Rs30 billion in fiscal year 2019-20.

Overall, the amounts to be paid by different fertilizer companies and other industries, under the head of GIDC has now been halved. The government would now demand only half the amount that was previously claimed and the GIDC rates for the future have also been halved, as this government believes that the government GIDC rates were higher than they should have been.

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