The Gas Infrastructure Development Cess (GIDC) is a

cess Cess (pronounced ) is a tax - generally one levied for promoting services like health and education. Governments often charge a cess for the purpose of development in social sectors. The word is a shortened form of "assess". The spelling is due ...

or levy introduced by the

government of Pakistan The Government of Pakistan () (abbreviated as GoP), constitutionally known as the Federal Government, commonly known as the Centre, is the national authority of the Islamic Republic of Pakistan, a federal republic located in South Asia, con ...

for the funding of gas infrastructure projects. The cess was applied to industrial sectors such as

fertilizer A fertilizer or fertiliser is any material of natural or synthetic origin that is applied to soil or to plant tissues to supply plant nutrients. Fertilizers may be distinct from liming materials or other non-nutrient soil amendments. Man ...

CNG Compressed natural gas (CNG) is a fuel gas mainly composed of methane (CH4), compressed to less than 1% of the volume it occupies at standard atmospheric pressure. It is stored and distributed in hard containers at a pressure of , usually in c ...

, and

power plant A power station, also referred to as a power plant and sometimes generating station or generating plant, is an industrial facility for the electricity generation, generation of electric power. Power stations are generally connected to an electr ...

s, but not directly to the general public. Its purpose is to finance the construction and maintenance of transnational gas pipelines, including the Iran–Pakistan gas pipeline, the Turkmenistan–Afghanistan–Pakistan–India (TAPI) Gas Pipeline, and various

liquefied natural gas Liquefied natural gas (LNG) is natural gas (predominantly methane, CH4, with some mixture of ethane, C2H6) that has been cooled to liquid form for ease and safety of non-pressurized storage or transport. It takes up about 1/600th the volume o ...

(LNG) projects. The cess has been controversial since it was introduced in 2011 and there have been numerous legal challenges to the law introducing it with large amounts having never been paid.

History

It was introduced in November 2011 under the Pakistan Peoples' Party government led by

Asif Ali Zardari Asif Ali Zardari (born 26 July 1955) is a Pakistani politician serving as the 14th president of Pakistan since 2024, having held the same office from 2008 to 2013. He is the president of Pakistan People's Party Parliamentarians and was the ...

. The GIDC was legislated as a Money Bill on November 25, 2011. The introduction and implementation of the GIDC were met with legal challenges from various industries, questioning its constitutionality and reasonableness. These challenges led to multiple

court case Legal proceeding is an activity that seeks to invoke the power of a tribunal in order to enforce a law. Although the term may be defined more broadly or more narrowly as circumstances require, it has been noted that " e term ''legal proceedings'' ...

s, including in the

Sindh High Court The High Court of Sindh () ( Sindhi: سنڌ ھائي ڪورٽ) is the highest judicial institution of the Pakistani province of Sindh. Established in 1906, the Court situated in the provincial capital at Karachi. Apart from being the highest ...

and

Peshawar High Court The Peshawar High Court (PHC, ) is the provincial and highest judicial institution of Khyber Pakhtunkhwa in Pakistan. It is located in the provincial capital Peshawar. The Parliament passed a bill extending the jurisdiction of the Supreme Cour ...

, and eventually escalated to the

Supreme Court of Pakistan The Supreme Court of Pakistan (; ''Adālat-e-Uzma Pākistān'') is the apex court in the Judiciary of Pakistan, judicial hierarchy of the Islamic Republic of Pakistan. Established in accordance witPart VIIof the Constitution of Pakistan, it h ...

. In a significant ruling on June 22, 2014, the Supreme Court declared the GIDC unconstitutional, stating that it could not be introduced through a Money Bill. In response, the government enacted the GIDC Ordinance in October 2014, which was again legally contested. This led to the introduction of the GIDC Act in May 2015, aiming to address the legal issues. Despite these legislative efforts, the GIDC Act continued to face legal challenges, leading to a series of stay orders against the billing and collection of the cess. This legal contention resulted in the accumulation of unpaid GIDC arrears from its inception in January 2012 until December 2018. To address the accumulating arrears, the PTI government issued a presidential ordinance on August 28, 2019, which proposed a 50 percent waiver on the GIDC and a 100 percent waiver on accumulated interest, along with a payment plan for arrears. This ordinance targeted sectors including CNG, fertilizers, and power generation, providing them the option to settle outstanding cess amounts under specified conditions.

References

{{reflist Taxation in Pakistan 2011 in Pakistani law