Denying GIDC arrears’ payment: PTI Govt to conduct audit of Fatima and Engro’s new fertilizer plants

Aftab Ahmed

Islamabad: The government of Pakistan Tehreek-e-Insaf (PTI) is set to go for audit of accounts of new fertilizer plants owned by Fatima and Engro Group following their refusal to pay multi-billion rupees arrears on account Gas Infrastructure Development Cess (GIDC) under amnesty scheme.

Engro and Fatima Fertilizer have not recognized GIDC on new concessionary gas amounting to Rs 63 billion.

The government is set to recover arrears worth multi-billion rupees on account of Gas Infrastructure Development Cess (GIDC) from new fertilizer plants of Fatima and Engro which they have not booked under presidential ordinance.

Sources told that every sector would have to pay 50 per cent of arrears on account of GIDC. Engro and Fatima new plants have been receiving 103 mmcfd and 110mmcfd gas respectively at concessionary rates whereas but they are reluctant to pay GIDC despite the fact they had received from the farmers.

Even, they have not booked amount of GIDC for the last three years. Every sector has been agitating that they had not passed on to the consumers. Ironically, fertilizer companies claim they have passed on Rs 70 per bag instead of Rs 400 per bag on account to GIDC.

The price of urea stood at Rs 1090 per bag in 2011 and however, it had witnessed sharp increase in 2012 after imposing GIDC which went up to Rs 1845 per bag.The fertilizer companies claim retail price of urea at Rs 1830 per bag but it is being sold at Rs 2200 to Rs 2400 per bag in market.

Officials said that those fertilizer companies who had paid GIDC since January 2012, they would not get refund and rather their claims would be adjusted against subsidy, general sales tax or any other claims.

So far government has recognized Rs701bn GIDC income but only received Rs285 billion, out of Rs285 billion Rupee 120 billion is only paid by fertilizer industry including Rs 89 billion rupee by Fauji group fertilizer companies and Rs31 billion by Engro Fertilizers.

In Fertilizer sector Fauji group fertilizer companies so far have booked GIDC amounting to Rs 152 billion and paid Rs 89 billion rupees, whereas Engro Fertilizer have booked Rs 44 billion rupee and only paid 31 billion. Furthermore, Engro Fertilizer have not booked GIDC on concessionary gas for its new plant amounting to approximately Rs 19 billion.

Under new GIDC Amnesty act Fauji Fertilizer company and its subsidiary would have net adjustment amounting to Rs 13 billion.  Engro Fertilizer would have net receivable amounting to Rs 9 billion, while Engro will have another Rs9.4 billion payable as government has decided to charge GIDC on its concessionary gas overdue by approximately Rs 19 billion and after 50% reduction would amount to Rs 9.4 billion.

Sector wise main beneficiary would be CNG, Captive power plants, KESC/GENCO/IPPs/Industry and Fertilizer which have current payables of Rupee 80/91.5/57.5/7.1/42.5 and 72.5 billion.

Among other sector CNG would pay Rs 27.9 billion. Captive power plants will pay Rs 37.4 billion out of 91.5 billion current payable and KESC/GENCO would be only Rs 6.3 billion out of Rs 57.5 billion under new amnesty scheme.

PTI Government is expected to approve long awaited GIDC Amnesty scheme through Presidential ordinance.  Pakistan People’s Party (PPP) has imposed GIDC for infrastructure development of Gas Transmission and development network in January 2012. From its implementation, companies have paid new cess initially but got stay order during Pakistan Muslim League Noon (PML-N) Government tenure in 2015 and stop paying GIDC.

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1 Comment

1 Comment

  1. Sher Shah

    July 12, 2019 at 10:21 am

    The fertilizer price related information at the time of levying of GIDC till today is as under….
    When GIDC was levied in 2012, price was 1580. If full impact of GIDC 400, gas price increase 393, GST reduction 191, inflation @1.4 percent 182 was factoeed in price, it should have been 2364… So price being lower with recent pass through impact of gas, 2040… speaking of inability of industry to pass through impact of GIDC

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