Gas import projects: bills seeking revision of levy laid before Senate

The government on Thursday introduced two bills in the Senate to revise the rates of levy on the basis of international market and gas import projects in public as well as private sectors. The government wants to make legislation as early as possible for gas import projects including Iran Pakistan (IP) Pipelines project, Turkmenistan Afghanistan Pakistan India (TAPI) gas pipeline project, LNG import and LPG supply enhancement projects, in public as well as in private sectors.
Federal Minister for Petroleum and Natural Resources Dr Asim Hussain laid "Petroleum Products (Petroleum Levy) (Amendment) Bill, 2011 and Gas Infrastructure Development Cess Bill, 2011" in the Senate for seeking recommendations of the Upper House of the Parliament. Federal Minister for Water and Power Syed Naveed Qamar had already introduced these Bills in the National Assembly on October 18, 2011.
Senator Muhammad Ishaq Dar of Pakistan Muslim League-Nawaz (PML-N) raised objections on the Bills saying that the bills are not money bills but independent amendments. He said that the bills should not be clubbed and placed separately in the House. While referring the bills to the Finance Committee, Senate Chairman Farooq H Naik said the members should present the recommendations on the bills till October 31, 2011.
According to statement of objects and reasons of "Petroleum Products (Petroleum Levy) (Amendment) Bill, 2011"; under the Petroleum Products (Petroleum Levy) Ordinance, 1961, Licensees and companies dealing in petroleum products pay petroleum levy to the government, Petroleum products for the purposes of this Ordinance are mentioned in the first Schedule. However, in terms of Section 3(1) of the Ordinance petroleum levy is payable on petroleum products as mentioned in the Fifth Schedule along with the applicable rates of levy.
The federal government was authorised to modify or change the Schedules form time to time; nevertheless by way of an amendment made through Finance Act, 2009 in Section 7 of the Ordinance, the Federal Government is constrained to modify, amend or change the Fifth Schedule. As a consequence of this amendment, change in the rates or addition or deletion of any product requires statutory amendment, every time.
Keeping in view the requirement to revise the rates of levy on the basis of international market and other relevant considerations and to add or delete certain petroleum products from the scope of Fifth Schedule, it is necessary to revive Section 7 in its original form, and omit Fifth Schedule from the Ordinance.
The federal government, in exercise of the powers conferred on it, submits the bill, the Petroleum Products (Petroleum Levy) (Amendment) Act, 2011 to perform the functions assigned to it as provided in the bill. According to Petroleum Products (Petroleum Levy) (Amendment) Bill, 2011, "Every company, refinery and licensee shall pay to the Federal Government, a petroleum levy on petroleum products at such rate as may be notified by the federal government in the official gazette, from time to time."
Similarly according to statement of objects and reasons of Gas Infrastructure Development Cess Bill, 2011, whereas it is expedient to provide for imposition and collection of infrastructure development cess on natural gas to abridge/meet the widening demand supply gap, a number of gas import projects are being pursued inter alia including Iran Pakistan (IP) Pipelines Project, Turkmenistan Afghanistan Pakistan India (TAPI) Pipeline Project, LNG import projects and LPG supply enhancement projects, in public as well as in private sectors. For the development of required infrastructure the imposition and collection of gas infrastructure development cess has become necessary otherwise Government of Pakistan would be forced to import liquid fuels which are much costlier as compared to gas. The Bill says "3. Levy of cess. (1) Every company shall pay cess at such rate and in such manner as the Federal Government may prescribe.
(2) An interest at the rate prescribed by the Federal Government shall be payable on any amount due under sub-section (1) if the said amount is not paid within the prescribed time.
4. Utilisation of cess.- The cess shall be utilised for or in connection with infrastructure development of Iran Pakistan Pipeline Project, LNG or other projects or for price equalisation of other alternative fuels.
5.Allowance to be made for cess for purposes of income tax.- The cess paid by a company shall be an expenditure for which allowance is to be made under the Income Tax Ordinance, 2001 (XLIX of 2001) in computing the profits or gains of that company.
6. Power to make rules.-(1) The Federal Government may, by notification in the official Gazette, make rules for carrying out the purposes of this Act.
(2) In particular and without prejudice to the generality of the foregoing power, such rules may provide for,-
(a) the manner and time of payment of cess;
(b) the manner of collection and recovery of arrears of cess; and
(c) any other matter for which provision is, in the opinion of the Federal Government, necessary for carrying out the purposes of this Act.
7. Power to amend Schedule.- The federal government may, by notification in the official gazette, make such amendments in the Schedule as it thinks fit."