Islamabad : The farming community has raised alarm over a proposed amendment to the Gas Infrastructure Development Cess (GIDC) Act 2015, warning that the move could trigger a constitutional crisis while devastating the agriculture sector with billions of rupees in new costs.
It is learned that government is considering amending Section 4 of the GIDC Act to broaden the scope of spending beyond gas infrastructure to general infrastructure projects. The move comes after the government failed to utilize collected GIDC funds within the timeframe mandated by the Supreme Court’s 2020 judgment.
The GIDC saga began in 2011 when the federal government introduced the cess to fund gas pipeline development. Major industries, including fertilizer manufacturers, immediately challenged its constitutional validity, triggering over a decade of litigation that froze collections.
In 2020, the Supreme Court finally upheld GIDC’s legality but with a critical condition: the funds must be spent specifically on gas infrastructure projects within a stipulated timeframe. The Court’s judgment resulted in billions of rupees in accumulated arrears that industries were ordered to pay.
However, fertilizer manufacturers were unable to pass these costs to farmers during the litigation period, leaving them facing massive historical liabilities. Now, with the proposed amendment, they face what observers call “double jeopardy.”
Legal experts and stakeholders are raising serious questions about the constitutional implications of the proposed amendment.
“If Parliament can retroactively change the purpose of a cess specifically to bypass the Supreme Court’s binding directions on its use, what remains of judicial independence and the rule of law in Pakistan’s constitutional framework?” asked a constitutional law expert.
The Supreme Court’s 2020 judgment explicitly directed that GIDC funds be used for gas infrastructure development—the original legislative intent. Critics argue that amending the law to expand spending scope after a final court ruling effectively nullifies judicial oversight and undermines the separation of powers.
“This sets a dangerous precedent,” said another legal scholar. “If the executive can legislatively overturn inconvenient court rulings by simply rewriting the law, it erodes the very foundation of our constitutional democracy.”
Beyond constitutional concerns, experts warn of catastrophic financial consequences for Pakistan’s agriculture sector.
The estimates suggest that accumulated GIDC arrears for fertilizer manufacturers run into tens of billions of rupees. With manufacturers already burdened by super tax, multiple levies, and high natural gas costs, they face two equally damaging options: absorb the costs and risk bankruptcy, or pass them to farmers through sharply higher urea prices.
During the 10-year legal battle, manufacturers couldn’t collect GIDC from farmers because the levy’s validity remained uncertain. Now they are going to be asked to pay billions in historical arrears while potentially facing ongoing future collections.
If the amendment enables both historical arrears collection and future GIDC levy, farmers will face what economists call “double taxation”: an immediate price shock from backdated costs plus permanently higher fertilizer prices going forward.
Agriculture experts warn that higher fertilizer costs threaten Pakistan’s food security at a particularly vulnerable time.
“Urea prices already carry multiple taxation layers. Adding GIDC could increase costs by a significant margin,” said an agricultural economist. “When fertilizer becomes unaffordable, farmers reduce application rates, which directly translates to lower crop yields.”
Pakistan’s food security depends heavily on fertilizer availability and affordability for wheat, rice, cotton, and sugarcane cultivation. With agriculture employing over 60% of the population, the ripple effects could be severe: reduced farmer incomes, higher food prices for consumers, and increased reliance on imported grains.
The timing compounds concerns. Pakistan faces ongoing economic challenges, climate-related agricultural stress, and IMF program commitments that already strain various sectors. Adding another cost burden to agriculture at this juncture could destabilize the one sector that provides employment and livelihood to the majority of Pakistanis. The Cabinet Committee on disposal of Legislative Cases (CCLC) has approved amendments in the Gas Infrastructure Development Cess (GIDC) Act, 2015 aimed at resolving the issue related to spending of stuck up GIDC amounts of over Rs. 400 billion, according to news reports.
Government officials have not publicly commented on the proposed amendment. Sources indicate that the measure is still under consideration at the ministerial level, with no timeline yet announced for parliamentary introduction.