The government has decided not to grant a concessionary gas tariff to zero-rated and export-oriented sectors, following litigation regarding tariff reduction for these industries.
According to a news report, the Economic Coordination Committee (ECC), during a recent meeting, noted that the concessionary gas tariffs for such sectors had already been exhausted in 2023. Considering further reductions could lead to additional legal challenges, the ECC directed the Commerce Division to expedite the case in consultation with the Attorney General’s office.
The Ministry of Commerce informed the meeting about a writ petition filed by Ghani Glass in 2019, requesting the extension of the Rs600 per million British thermal units (mmBtu) concessionary gas tariff for zero-rated sectors to their industry. The Petroleum Division, Oil and Gas Regulatory Authority, Sui Northern Gas Pipelines Limited (SNGPL), and the Federal Board of Revenue (FBR) were respondents in the petition, but the Ministry of Finance and Ministry of Commerce were not initially included as parties until April 2025.
The Lahore High Court directed the Ministry of Finance, in coordination with the Ministry of Commerce and other stakeholders, to present the Ghani Glass case to the ECC within 60 days. The case involves whether glass should be classified as an export-oriented sector for receiving the tariff concession and whether the concession should apply retroactively to 2015.
The Ministry of Commerce outlined that several sectors, including textiles, carpets, leather goods, and surgical instruments, had received zero-rated sales tax status under SRO 1125(I)/2011, with a concessionary tariff later extended to these sectors in 2018. However, after the withdrawal of the SRO through the Finance Bill 2019, an administrative gap occurred, and the glass industry, which had negligible exports at the time, did not qualify for the same concession.
In response to the court’s ruling, the Ministry of Commerce stated that Ghani Glass’s request for the concession was not justified and sought the ECC’s approval to reject the demand. The ECC has agreed to the proposal, and the Ministry of Commerce will approach the Attorney General’s office for further proceedings.
