GIDC bill stalls as Rs 453bn remains unrecovered

The development has also raised concerns for farmers, as petroleum officials have estimated that financing a proposed $500 million gas network linking the Mari gas field

ISLAMABAD: Pakistan’s long-running Gas Infrastructure Development Cess (GIDC) controversy has entered a fresh phase, with Rs 453 billion still awaiting recovery from defaulters while Rs 295 billion reportedly remains unutilised, even as the government seeks to expand the scope of the levy to finance new strategic gas infrastructure.

The development has also raised concerns for farmers, as petroleum officials have estimated that financing a proposed $500 million gas network linking the Mari gas field with fertiliser plants could increase the price of a fertiliser bag by around Rs 700 if the cost is passed on through GIDC.

The issue has gained renewed prominence following the government’s move to amend the GIDC law. The proposed GIDC (Amendment) Bill 2026 seeks to broaden the permissible use of the collected funds beyond the projects originally specified under the 2015 legislation.

Under the existing framework, GIDC funds are primarily linked to major gas infrastructure projects, including the Iran-Pakistan pipeline, the Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline and LNG-related projects. The proposed amendment would also allow spending on strategic underground oil and gas storage facilities, a new pipeline network connecting the Mari gas field with fertiliser plants and other strategic gas infrastructure.

However, the proposed legislation has encountered resistance in Parliament. The National Assembly Standing Committee on Petroleum deferred the bill during its September 5, 2026 meeting, with lawmakers reportedly raising questions over the utilisation and recovery of funds collected under the levy.

A source familiar with the parliamentary discussions said members of allied parties had questioned why the government was seeking permission to expand the use of GIDC funds when a substantial amount from previous collections remained unrecovered or unspent.

The dispute comes against the backdrop of a Supreme Court judgment delivered in August 2020, which rejected petitions filed by various industrial sectors challenging the levy. The judgment involved 107 petitions filed by companies from sectors including textiles, sugar, chemicals, cement, fertiliser, ceramics, aluminium and CNG.

The court had directed recovery of outstanding GIDC liabilities, with the amount then estimated at around Rs 417 billion. According to officials, the outstanding liability has subsequently risen to approximately Rs 453 billion after the addition of applicable interest and late-payment charges.

The Supreme Court had also provided a mechanism for payment through instalments. The judgment further linked the utilisation of the funds to the government’s progress on the specified gas infrastructure projects.

Despite the verdict, recovery efforts have remained entangled in further litigation. Officials and sources familiar with the matter said a portion of the outstanding amount was recovered from industry in Punjab, while cases involving companies in Sindh and other sectors continued to face legal challenges and stay orders.

The financial trail has also raised questions over the government’s handling of the money already collected. Official figures cited in recent briefings indicate that around Rs 295 billion remains unutilised, with the slow progress or legal complications surrounding major pipeline projects being cited among the reasons.

At the same time, an audit report has reportedly identified another Rs 16.7 billion in GIDC that Sui Southern Gas Company (SSGC) failed to recover from consumers. The finding has prompted questions about the effectiveness of collection and enforcement mechanisms maintained by gas distribution companies.

The controversy is particularly significant for the fertiliser sector, which has historically been among the largest consumers of subsidised gas. Official data cited in the matter puts outstanding liabilities of major fertiliser companies at more than Rs 110 billion.

The liabilities reportedly include around Rs 63 billion attributed to Fauji Fertilizer Company, Rs 22 billion to Fauji Fertilizer Bin Qasim, Rs 19 billion to Engro Fertilizers and around Rs 6 billion linked to Fatima Fertilizer Group.

The companies have maintained, according to official records, that their gas supply agreements were based on fixed prices and that GIDC was therefore not applicable in the manner claimed by the government. The government, however, maintains that the levy remained recoverable and that the Supreme Court had already settled the core legal dispute.

The CNG and power sectors have also remained part of the wider GIDC dispute, with significant amounts reportedly outstanding from businesses that had passed the levy on to consumers.

The latest controversy has therefore created a difficult policy dilemma for the government. While authorities are seeking parliamentary approval to use GIDC funds for additional strategic infrastructure, a significant amount remains locked in litigation and recovery proceedings.

The proposed Mari-to-fertiliser pipeline has become a particular point of contention because officials have estimated its cost at approximately $500 million. If the expense is recovered through the GIDC mechanism, the additional burden could translate into an estimated Rs 700 increase per fertiliser bag, potentially raising input costs for farmers.

The situation has prompted questions over whether unutilised GIDC funds could be deployed before imposing an additional burden on fertiliser consumers, and why billions in outstanding collections have remained unresolved despite the Supreme Court’s intervention.

The government is now reportedly considering accelerated legal proceedings to recover the outstanding Rs 453 billion. Officials have also indicated plans for a detailed examination of the liabilities of fertiliser companies and legal action aimed at expediting cases pending before the courts.

For now, however, the parliamentary deadlock over the proposed GIDC amendment has left the future use of the levy uncertain. With hundreds of billions of rupees still tied up in recovery disputes and a large portion of collected funds remaining unutilised, the GIDC controversy continues to pose questions about Pakistan’s energy financing, industrial liabilities and the ultimate burden on consumers.