Pakistan Government Rejects Concessionary Gas Tariff for Export-Oriented Sectors

Strategic Insights -

In a move aimed at preventing a flood of similar cases, the Pakistani government has decided against granting a concessionary gas tariff to zero-rated and export-oriented sectors. This decision was made during a recent Economic Coordination Committee (ECC) meeting, where it was observed that the concessionary gas tariffs had already been exhausted in 2023. The ECC noted the position and directed the Commerce Division to pursue the case expeditiously in consultation with the Attorney General's office.

The Ministry of Commerce briefed the meeting that a writ petition filed by Ghani Glass in 2019 in the Lahore High Court had sought to extend the concessionary gas tariff to the petitioner as well. However, the court directed the Ministry of Finance and the Ministry of Commerce to develop a rational policy to ensure that only export-oriented industries receive all concessions.

Key Takeaways:

  • The Pakistani government has rejected concessionary gas tariff for zero-rated and export-oriented sectors, citing that the tariffs have already been exhausted in 2023.
  • A writ petition filed by Ghani Glass in 2019 in the Lahore High Court sought to extend the concessionary gas tariff to the petitioner as well.
  • The Lahore High Court directed the Ministry of Finance and the Ministry of Commerce to develop a rational policy to ensure that only export-oriented industries receive all concessions.
  • The Commerce Division has argued that the concession had been offered to sectors that had a significant share in Pakistan's total exports in 2011, whereas the glass industry's annual exports were negligible.
  • The Ministry of Commerce has filed a Civil Petition for Leave to Appeal in the Supreme Court, challenging the ruling of the Lahore High Court.
  • The ECC directed the Ministry of Commerce to approach the Attorney General's office to pursue the case expeditiously.

Statistics:

  • The concessionary gas tariff had been fixed at Rs600 per million British thermal units (mmBtu) since 2019.
  • The glass industry's annual exports were $15.9 million in 2011, which is considered negligible compared to other sectors.
  • The Lahore High Court directed the Ministry of Finance and the Ministry of Commerce to develop a rational policy within 60 days.
  • The ECC was directed to consider the petitioner's request for tariff concession within 60 days.

Sources:

  • Lahore High Court decision in Writ Petition No 61559 of 2019 titled Ghani Glass versus Federation of Pakistan.
  • Ministry of Commerce briefing to the ECC on the Implementation of Decision of the Lahore High Court in Writ Petition No 61559 of 2019.