In a letter to Secretary Finance, Arif Ahmed Khan, the company stated that under the GIDC Act 2011 till GIDC Ordinance 2014, the government of Pakistan, in line with its sovereign commitment under Fertilizer Policy 2001, did not impose GIDC on fixed price feed gas. However, contrary to the sovereign commitment under Fertilizer Policy 2001, GIDC on fixed price feed gas was not excluded from GIDC Ordinance 2014 and GIDC Act, 2015.
M/s Engro's Chief Executive Officer argued that in line with the sovereign commitment, fixed price feed gas (70 cents) given to new fertilizer plants under Fertilizer Policy 2001 needs to be excluded from imposition of GIDC or any cess/tax, by whatever name called for complete fixed gas price period.
In another letter, he said that M/s Engro fully supports government's intent to settle GIDC however fertilizer industry is currently paying additional Rs 500/mmbtu for gas streams priced under Petroleum Policy 2012, which is already significantly higher than the fertilizer industry gas price.
"From the time we have started receiving gas supply under this regime, we have been contesting with DG Gas that the Petroleum Policy only refers to well head pricing mechanism which is applicable to the producer only, whereas, the price for the consumer is determined by OGRA and is already specified for the Fertilizer sector under the Fertilizer Policy 2001," he added.
It is therefore requested that no GIDC be charged on gas supply priced under Petroleum Policy 2012 till our pricing is aligned with fertilizer sector price which is under Fertilizer Policy of 2001.
Gas price under Petroleum Policy 2012, even without GIDC, is far higher than notified feed gas price with GIDC under Fertilizer Policy 2001.
The company has requested Secretary Finance to incorporate the GIDC issue during the course of the legislative process for restructuring of GIDC regime, and to allow the fertilizer industry to use gas to provide much needed fertilizers to farmers.
