Rs210bn GIDC write-off is ‘no free lunch’, says Omar – Newspaper

ISLAMABAD: The government defended on Monday its decision to cancel around Rs210 billion to large companies from its outstanding Rs420bn bills because of Gas Infrastructure Development Cess (GIDC), saying it gave up past invoices & # 39; uncertain & # 39; ; to ensure a low but more certain flow of future income.

"It is not a free lunch for fertilizers or any other sector," said Energy Minister Omar Ayub Khan at a joint press conference called hastily with the Special Assistant to the Prime Minister on Petroleum, Nadeem Babar, who said the ordinance GIDC exemption was drafted following the pattern. of the GIDC Law (Amendment) introduced by the PML-N government for a similar agreement with the CNG sector.

The minister said that the fertilizer industry will have to undergo a forensic audit to determine if it had collected GIDC from farmers and, if so, to what extent and would have to reimburse such amounts to farmers through future price adjustment or deliver these amounts to the government treasury.

"All industries that are part of the GIDC and dispute cases in the courts would have to formally sign conciliation agreements to withdraw their cases from the courts, pay 50{7be40b84a6a43fc4fae13304fce9a2695859798abfc41afd127b9f8b21c5f9c5} of past arrears within 90 days in advance and take advantage of the half of the GIDC rate in the future, "Ayub said, adding that those who choose not to take advantage of the option will be free to prosecute court cases, but would not be entitled to lower fees once the cases are resolved.

The agreement is the work of Asad Umar and Razak Dawood

Babar said some sectors were creating a misperception that the government had opted for Rs210bn for Rs420bn despite the fact that an amount of Rs147bn collected between 2011 and 2014 had been declared ultra-vires of the constitution by the Supreme Court of Pakistan. As such, an amount of Rs273bn was uncertain due to subsequent suspension orders in several higher courts and the observations of the judges.

"Therefore, we have put an end to the uncertainty about Rs273bn by ensuring an expected recovery of Rs210bn in addition to streamlining a future revenue stream," Babar said, adding that the government was not actually receiving more than 15 percent of total bills. and 85 percent accumulated as arrears whose recovery was subject to court rulings that can take between 8 and 10 years and no guarantees in which direction these decisions can go.

"We have ensured that the government collects Rs42bn per year instead of just Rs15bn," he said, adding that the government believed that previous GIDC rates were on the highest side and needed to be streamlined.

Interestingly, last year the government raised Rs25bn against a target of Rs100bn and set a target of Rs30bn for 2019-20. He said he [Babar] and Omar Ayub were not part of the conversations with the industry that led to the current agreement, but former finance minister Asad Umar and trade advisor Abdul Razak Dawood maintained detailed interactions and finalized the agreement and ordinance.

Fatima and Engro Fertilizer had an outstanding amount of Rs65bn, so they must now pay Rs32bn. He said the current government believed that they should not have been submitted to GIDC since the PPP government had given them fixed gas rates for 10 years and two years outside of this period still remained.

Babar separated the total arrears of Rs417bn, excluding Rs147bn. He said that the old fertilizer plants have to pay Rs71bn and now they will pay Rs35bn while the new fertilizer plants (Engro and Fatima) had Rs 65bn and now they will pay Rs32bn to make sure they get a lower rate when their protection period ends. 10 years. .

An amount of Rs43bn was pending against the general industry that would now pay around Rs21bn. Similarly, there was an outstanding amount of Rs10bn against IPP, Rs34bn against K-Electric, Rs30bn against Wapda Gencos and Rs78bn against the CNG sector. IPPs will now pay Rs5bn, KE Rs17bn, Gencos Rs15bn and CNG sector Rs37bn.

He said that the recovery of CNG could not be reimbursed to consumers because there were too many people involved, but this amount could be deposited with the government. He explained that the outstanding funds against IPPs or other power plants were not pending with investors or companies because the total costs were an item approved by the regulator and could only be adjusted through a regulatory mechanism.

Posted on Dawn, September 3, 2019



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