Government seeks to justify GIDC waiver


–Omar Ayub says there won’t be free lunch for anyone as govt aims to collect Rs210bn

–Nadeem Babar says presidential ordinance would enable the govt to collect 42bn every year

ISLAMABAD: In a bid to justify the waiver given on Gas Infrastructure Development Cess (GIDC), the federal government on Monday said that there would be no free lunch for influential industrialists, rather a forensic audit would be conducted of fertilizer plants to assess and recover the amount collected from the farmers.

This was announced by Adviser to Prime Minister on Petroleum Nadeem Babar and Federal Minister for Power Omar Ayub Khan during a joint press conference.

Omar said that the government would conduct a forensic audit of the fertilizer plants would be conducted to assess the amount they had received from the farmers on account of GIDC. He said that the presidential ordinance regarding GIDC was taken in the best interests of the nation because the government aims to collect Rs210 billion out of the total Rs417 billion which were not being collected.

The minister said that the main beneficiaries of the 50 per cent waiver are the new fertilizer plants because the government has waived of Rs65 billion in outstanding dues. “Under agreements signed during the Pakistan People’s Party (PPP) government, they were not liable to pay GIDC but they still collected it from farmers by raising the prices of urea,” he said.

Sharing details of the multi-billion waiver to business tycoons, the minister said that out of the total Rs417 billion, old fertilizer plants would have to pay 71 billion, new fertilizer plants Rs65 billion, general industry Rs43 billion, IPPs Rs10 billion, KE Rs34 billion, WAPDA GENCOS Rs30 billion and CNG Rs78 billion. Other sectors could avail the scheme for waiving off 50 per cent outstanding dues, he added.

Adviser to Prime Minister on Petroleum Nadeem Babar said that export-oriented sectors were being exempted from the new rate of 50 per cent GIDC. The new fertilizer plants had also been exempted from GIDC as they had obtained a stay order from the court saying that it was not applicable on them under policy/agreement, he added.

Babar said that the GIDC was imposed to recover money for setting up infrastructure of imported gas, but the amount collected had been used for budgetary support in the past and different courts had given stay orders against its recovery. He said that the GIDC recovery was 15 per cent during the last eight years whereas 85 per cent of the amount was left hanging due to the stay orders.

He also said that the Pakistan Muslim League-Nawaz (PML-N) government had gotten the GIDC act approved from the parliament, thus enabling the CNG sector to pay 50 per cent of their outstanding dues. He added that presidential ordinance in this regard was preceded by consultations with different industries.

Babar ruled out the impression that any benefits had been given to different groups, saying that GIDC rate was high in the past which is why it was being reduced by 50 per cent. “The government is currently collecting Rs15 billion and with the promulgation of the ordinance, we will be able to collect Rs42 billion every year,” he added.

On August 29, the government waived off approximately Rs208 billion in GIDC through a presidential ordinance while this amount had been already been collected from poor farmers and masses during the last five years. This amount was to be deposited to the national exchequer to develop Iran-Pakistan (IP) Gas Pipeline project, Turkmenistan-Afghanistan-India (TAPI) Gas Pipeline project and for the development of other energy-related projects.

Through the waiver of Rs208 billion, the rate of surcharge for the companies would also be decreased by 50 per cent as President Arif Alvi has approved amendments in the GIDC Act. The companies would deposit around Rs208 billion to the national exchequer for gas development infrastructure projects out of Rs416 billion which they had collected in the past five years.  Fertilizer companies, including Fatima Fertilizer, Pak Arab Fertilizer and Engro Fertilizer had been given a waiver of approximately Rs69 billion with effect to promulgation of presidential ordinance regarding GIDC. As per new law regarding GIDC, Sui Northern and Sui Southern will ensure forensic audit of all those companies which had so far collected the GIDC.

Documents available with Pakistan Today further disclosed that influential industrialists, owners of fertilizer plants, CNG stations, power plants, etc. have not deposited the approximate amount of Rs416 billion to the national exchequer which they had already collected from the farmers and the masses during the last five years under the head GIDC, and finance ministry, after conducting several meetings with traders, agreed to waive off 50 per cent arrears of Rs416 billion.