GIDC judgment

Business Recorder/18-08-2020


ISLAMABAD: A three-member bench of the Supreme Court (SC) has delivered a majority judgement, with one member dissenting, in the long running Gas Infrastructure Development Cess (GIDC) conundrum. It allows the government to collect the Rs 405 billion unpaid balance of the Rs 700 billion accrued between 2011 and 2015 from industry, with the concession that the outstanding amount can be paid over two years. To recount, the levy was imposed in 2011 to raise funds for three major gas pipelines, the North-South (in country), TAPI, and the Iran-Pakistan pipelines. Shortly after its introduction, most companies charged the levy moved the courts against it, many billed their customers fully or partially to recover the amount (e.g. CNG pumps), and others could not do so. Some companies fully or partially paid it, or took shelter behind stay orders issued by the courts. In 2019, Prime Minister Imran Khan’s Pakistan Tehreek-i-Insaaf (PTI) government attempted to cut through the Gordian knot by enacting an Ordinance that amended the GIDC law to the extent of allowing industries to pay half the outstanding amount, with the other half waived. Well intentioned as the effort may have been to overcome the impasse, there was a public outcry and petitions were moved in the SC against the Ordinance. The PTI government then decided to let the SC decide the matter.

What the SC has now held is that the government can recover the outstanding accrued amount of Rs 405 billion over two years but must link any future collections to the complete utilisation of the funds collected for the purpose they were intended for. In other words, the levy cannot be used for any other purpose than the three pipelines mentioned above. So far so good, but as the dissenting opinion states, is there a definite timeline for the utilisation of these funds? This point goes to the heart of the problem (after the collection issue has been resolved by the SC). For two of the three pipelines, no timeline can be confidently predicted. TAPI depends on the situation inside Afghanistan, which the pipeline traverses on its way from Turkmenistan to Pakistan. Unless peace is restored in Afghanistan, TAPI will remain stillborn. The GIDC conundrum may seemingly have been settled by the SC judgment, but these important and unanswered considerations throw a considerable shadow across its horizon.