ISLAMABAD - The Supreme Court of Pakistan was Monday informed that though the federal government has collected Rs 295 billion in respect of Gas Infrastructure Development Cess (GIDC) in the last 11 years but fraction of amount spent on the projects for that amount collected.

A three-member special bench of the apex court headed by Justice Mushir Alam heard 107 petitions/appeals of various textile mills, cotton mills, sugar mills, ceramics companies, chemicals, CNG filing stations, Match factories, cement companies and aluminum industries regarding GIDC levy.

Makhdoom Ali Khan citing the government report on GIDC, informed that financial close and appointment of EPC contractor could not be achieved due to sanctions. In 2014 Pakistan issued Force Majeure and Excusing Event Notice. Iran did not accept Pakistan’s claim of Force Majeure and Excusing event vide its letter in June 2018. The meeting with Iranian authorities was held in November 2018 to discuss the way forward and decided that the legal teams of both sides will work together to obtain clarity on sanction as a way forward.

He added that Iran proposes an addendum to the GSPA (Gas Sale Purchase Agreement) for extending the limitation period of any claims under the GSPA for another term of five-years. Subsequently, Iran served the ‘Seller Termination Event’ notice to ISGS on 28th February 2019 alleging material breach of buyer’s warranties under the GSPA. The matter of material breach notice has been amicably resolved thereby avoiding potential arbitration on the issue.

Justice Mushir Alam, who presided over a three-judge bench, observed that though the countries (Pakistan-Iran) have spent huge amount on the project but because of the USA sanctions the Iran-Pakistan Pipeline project could not be completed.

Makhdoom Ali Khan informed the court that despite that the government has collected Rs295 billion, but fraction of it has been spent. He said the amount is now part of consolidate fund and thus part of the annual budget.

Makhdoom said in TAPI project Pakistan has fulfilled its commitment and it will be completed by 2023-24. Under the agreement the Consortium Leader of TPCL will inject 85% of equity part in TPCL, while the rest of the TAPI members share 5% each of the equity.

He contended that GIDC Act can’t be upheld as fee, adding the appellant did not receive any benefit the fee they pay. No amount has been earmarked for the service. Justice Faisal Arab asked the counsel that you mean to say that in the instant case the focal point is that the benefit could be made instant or made in future. The court observed that the benefit could be that more gas will be available to the consumers including the appellants.

The Peshawar High Court (PHC) on May 31, 2017, had rejected a set of petitions challenging the validity of the GIDC Act 2015 on the grounds that the transgression of legislative authority by the federation does not qualify as a breach of fundamental rights of citizens and therefore the petitioners before the high court were not aggrieved persons within the meaning of Article 199 of the Constitution and thus have no locus standi to challenge the validity of the act.

The PHC in its judgement had also held that when Article 142 (a) read with Article 154 of the Constitution, it became evident that the parliament had the exclusive authority to legislate on Entries in Part II of the Federal Legislative List of the Constitution.

In April 15, 2015, the apex court rejected the federal government’s petition seeking review of its Aug 22, 2014 verdict and clarify that the collection of then over Rs100 billion under GIDC Act was not liable to be refunded to the industrial consumers of gas from whom it was recovered. The then GIDC law had legalised the cess recovery from the non-domestic consumers, mainly industries. Later, the bench deferred hearing till Tuesday (today) in this matter.