ISLAMABAD: The National Assembly is expected to consider the Gas Infrastructure Development Cess (Amendment) Bill, 2026, a proposed legal change aimed at resolving more than Rs400 billion in disputed and outstanding Gas Infrastructure Development Cess (GIDC) payments currently tied up in litigation.
The proposed legislation seeks to amend the Gas Infrastructure Development Cess Act, 2015, and comes after years of legal disputes between the government and major gas consumers, including industrial, fertiliser and CNG sectors.
The Cabinet Committee for Disposal of Legislative Cases (CCLC) approved the proposed amendments in principle earlier this year, paving the way for the government to move forward with the legislative process.
The GIDC was originally introduced to generate funds for major gas infrastructure projects, including the Iran-Pakistan (IP) gas pipeline, the Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline, LNG-related projects and other associated infrastructure.
However, progress on several of these projects has remained slow, while the collection and utilisation of the cess became the subject of prolonged litigation.
Legal history of GIDC
According to a briefing provided by the Petroleum Division to the CCLC, the original Gas Infrastructure Development Cess Act, 2011, and the GIDC Ordinance, 2014 were struck down by the Supreme Court in 2014.
The government subsequently enacted the GIDC Act, 2015, in May that year. The new legislation also provided retrospective legal cover to the cess that had been charged and collected under the 2011 Act and the 2014 ordinance.
Section 4(1) of the 2015 law specifies that the cess is to be utilised by the federal government for infrastructure development related to the IP pipeline, TAPI pipeline, LNG projects and other ancillary schemes.
The constitutional validity of the 2015 legislation was subsequently challenged by consumers from the industrial, fertiliser and CNG sectors before different high courts. The disputes eventually reached the Supreme Court.
In its judgment of August 13, 2020, the Supreme Court dismissed the civil appeals and connected petitions and upheld the constitutionality of the GIDC Act, 2015, including its retrospective application.
The court, however, did not permit the government to impose a fresh cess under the disputed arrangements. Instead, it allowed recovery of outstanding arrears through instalments.
Supreme Court links cess to infrastructure projects
A significant aspect of the Supreme Court’s ruling was its observation that GIDC constituted a fee rather than a conventional tax.
As a fee, the court noted, there must be a corresponding benefit or service associated with the amount collected. The infrastructure projects identified under Section 4 of the Act therefore formed an important basis for the continuation and utilisation of the cess.
The court also observed that failure to pursue the specified gas infrastructure projects could undermine the purpose for which the cess had been imposed.
Despite the Supreme Court judgment, the dispute did not come to an immediate end, as consumers continued pursuing related matters before the high courts. This resulted in a substantial amount of GIDC remaining locked in prolonged litigation.
Government forms high-powered committee
In an attempt to find a solution, Prime Minister Shehbaz Sharif constituted a high-powered GIDC Committee on November 8, 2022, to examine the issue of outstanding amounts exceeding Rs400 billion.
The committee held several meetings following its formation, but progress remained limited because of continuing litigation in different high courts.
The matter was again taken up on March 19, 2025, when the committee met under the chairmanship of the federal Minister for Finance and Revenue.
The meeting was attended by the Minister for Petroleum Division, the Attorney General for Pakistan and senior officials from the Petroleum, Finance and Law divisions.
During the meeting, participants agreed in principle that Section 4 of the GIDC Act, 2015 should be amended to help address the long-running legal disputes.
Following the committee’s recommendations, the Petroleum Division prepared a proposal for amendments and submitted a summary seeking approval of the draft GIDC (Amendment) Act, 2025.
First amendment proposal rejected
The initial proposal, however, was not approved by the CCLC at its meeting on September 3, 2025.
The committee directed the Petroleum Division to revisit the draft and ensure that the proposed changes remained within the original scope and objectives of the GIDC Act, 2015.
The Petroleum Division subsequently revised the draft after consultations with the relevant government departments.
The amended draft was sent to the Law and Justice Division for legal scrutiny, which gave its concurrence on December 15, 2025.
The Petroleum Division then sought formal approval of the revised GIDC amendment bill under the relevant provisions of the Rules of Business, 1973.
The Finance Division had also been consulted during the process and conveyed that it had no objection to the proposal contained in the summary submitted to the CCLC.
CCLC gives approval to revised proposal
The CCLC considered a Petroleum Division summary dated January 1, 2026 concerning amendments to the GIDC Act, 2015.
The committee approved the proposal, subject to the incorporation of amendments recommended by the CCLC into the draft legislation by the Law and Justice Division before the bill was submitted to the federal Cabinet.
The approval represents another attempt by the government to break the deadlock surrounding billions of rupees in GIDC dues and bring a degree of finality to disputes that have continued for more than a decade.
TAPI project remains slow
The government’s original justification for GIDC included financing major regional gas infrastructure projects. However, the implementation of these projects has remained challenging.
The TAPI pipeline, envisioned to transport natural gas from Turkmenistan through Afghanistan and Pakistan to India, has faced repeated delays because of financial, security and geopolitical challenges.
Although work has reportedly begun on an initial 153-kilometre section extending from Serhetabat on the Turkmenistan-Afghanistan border towards Herat in western Afghanistan, the broader project remains far from completion.
The proposed amendment is therefore being viewed as an effort to address both the legal complications surrounding outstanding dues and the government’s need to bring greater clarity to the utilisation of the cess.
