The government on Monday tried to justify a waiver of over Rs200 billion for business tycoons saying it was not a ‘free lunch’ and that the move was taken ‘in the best interest’ of the nation.
The Pakistan Tehreek-e-Insaf (PTI) government on August 30 waived Rs208 billion worth of liabilities of a few industrialists in addition to writing off late payment surcharge for the past seven years through a presidential ordinance, bringing into dispute its claim of a clean government.
President Arif Alvi promulgated the Gas Infrastructure Development Cess (Amendment) Ordinance 2019 to waive half of the outstanding liabilities of fertiliser, textile, power generation, and compressed natural gas (CNG) sectors. The ordinance was published in the official gazette on last Wednesday.
Through the presidential ordinance, the government also reduced GIDC rates by up to 75%, which would push down prices of gas and fertiliser for the end-consumers. The life span of a presidential ordinance is four months, which can be extended for another four months.
Addressing a press conference along with Adviser to Prime Minister on Petroleum Nadeem Babar, Minister of Petroleum Omar Ayub called the move ‘a big success’, adding that it is not a free lunch.
“The government would conduct a forensic audit of fertilizer plants to assess how much money on account of GIDC they have received from the farmers,” he said.
Nadeem Babar said export-oriented sectors are being exempted from the new rate of 50 per cent GIDC. New fertiliser plants have also been exempted from the GIDC.
“New fertiliser plants had obtained a stay order from the court saying the GIDC was not applicable to them under a policy. The cess was imposed to recover money to set up the infrastructure of imported gas.”
He said the money collected under this head had been used for budgetary support and therefore different courts had given stay order against recovery of the GIDC.
“Collection of the GIDC was 15 per cent during last eight years whereas 85 per cent recovery was not being made due to stay orders obtained from courts,” he added.
He said the last Pakistan Muslim League-Nawaz (PML-N) government had also approved the GIDC Act from the parliament enabling the CNG sector to pay 50 per cent outstanding amount. “This process had been continued following consultation with different industries,” he added.
He also ruled out any benefits being given to different business groups. “The GIDC rate was high and this is being reduced by 50 per cent,” he said.
Omar Ayub said the government was collecting now Rs15 billion GIDC and the new move would enable it to collect Rs42 billion every year following a settlement under the GIDC Ordinance.
Regarding higher profits made by the independent power producers (IPPs), he said the government has formed a committee to analyse the profits and agreements with the IPPs. “This committee would also assess the heat rate and energy audit of the IPPs,” he said.
The major beneficiary of the ordinance is fertilizer sector as the government has waived Rs65 billion outstanding against new fertilizer plants saying they were not liable to pay the GIDC under agreements signed by the last Pakistan People Party (PPP) government. However, these new fertiliser plants had already charged the cess from the farmers as they raised the prices of urea.
Under the ordinance, the government has penalized sectors like small industries that have continued paying this tax for the last eight years. However, the government has waived over Rs200 billion outstanding those who had not paid the GIDC and obtained stay orders from courts,
Out of total Rs417 billion, old fertilizer plants have to pay Rs71 billion, new fertilizer plants Rs65 billion, general industries Rs43 billion, IPPs Rs10 billion, KE Rs34 billion, Wapda Gencos Rs30 billion and CNG TRs Rs78 billion. The new fertilizer plants would not pay the GIDC whereas other sectors could avail the schemes, waiving 50 per cent outstanding dues.