ISLAMABAD - The Khyber Pakhtunkhwa government is likely to move Supreme Court against the imposition of Gas Infrastructure Development Cess, it is learnt reliably here yesterday.

The federal government’s collection of GIDC is illegal, unconstitutional and violation of the Supreme Court decision, therefore, the KP government is planning to challenge it in the superior court, an official source in the KP government told The Nation.

The source said that GIDC is a controversial issue and various courts in the country have already declared it illegal and unconstitutional, therefore, the federal government has no right to impose it on the consumers.

Moreover, the source said, mineral, oil and natural gas appear in part II schedule four of the constitution of Pakistan and, under article 154 of the constitution, the Council of Common Interests (CCI) is the competent forum to deliberate, formulate, regulate and decide the matters related to Part II of the Federal Legislative list.

The Gas Infrastructure Development Cess Act, 2011 was first promulgated in 2011 which provided for the imposition and collection of infrastructure development cess on natural gas, to be collected by the “Company” as specified in the First Schedule and as per the rates specified in the 2nd Schedule to the aforesaid Act.

Different petitions were filed in different courts on the issue of levy of GIDC. In its decision on 13th June, the Peshawar High Court declared the levy, imposition and recovery of the cess unconstitutional, with the direction to refund the cess so far collected within a reasonable time.

Later, the Supreme Court in its decision, on August 2014, upheld the judgment of Peshawar High Court declaring the levy of GIDC as unconstitutional and illegal. But soon the federal government promulgated a new ordinance namely Gas Infrastructure Development Cess Ordinance, 2014 (Cess Ordinance).

The GIDC Ordinance 2014 was challenged in different courts and the Lahore High Court (LHC) suspended the levy as well as collection of GIDC. But the federal government has once again enacted new GIDC Act 2015 with few cosmetic changes, the source said.

Now the provincial government has decided to challenge the decision regarding the GIDC in the supreme court, the source informed.

Similarly, the source also opposed the decision of the Economic Coordination Committee (ECC) of the Cabinet to charge Rs 101 billion from the gas consumers saying that it has no right to impose extra burden on the consumers.

Despite opposition from OGRA, ECC of the Cabinet last month decided to charge consumers of the SNGPL and SSGC Rs101 billion to partly finance thepipeline network. Ogra was of the view that pipeline projects should be financed out of the GIDC.

In another similar development the CM KP has written a letter to the federal government asking for the allocation of funds from GIDC, on priority basis, for maintenance, development and up-gradation of natural gas transmission and distribution network in KP.

The federal government has said that according to OGRA’s decision funding for the development of gas pipeline infrastructure in Khyber Pakhtunkhwa must be carried out from GIDC or royalty.

Since the royalty on gas cannot be utilized for the gas development projects, therefore, the federal government is requested to allocate funds from GIDC, on priority basis, for maintenance, development and up-gradation of natural gas transmission and distribution network in KP.

Earlier, the Sindh government also demanded of the central government for the transfer of its GIDC share to the province. Sindh is a major gas-producing province contributing about 69% of the country’s gas production. The federal government is collecting GIDC on gas consumption which is federal taxes that are not part of the divisible pool.

The GIDC is being collected from the gas consumers to fund the planned gas pipeline projects.