Cabinet panel clears amendments to GIDC law to unlock over Rs400 billion in stuck funds

The Cabinet Committee on the Disposal of Legislative Cases (CCLC) has approved amendments to the Gas Infrastructure Development Cess (GIDC) Act, 2015, in a move aimed at resolving long-pending litigation and enabling the utilisation of more than Rs400 billion in accumulated GIDC funds, according to officials familiar with the decision, Business Recorder reported. 

The Petroleum Division informed the CCLC that the GIDC framework has faced legal challenges since the Supreme Court struck down the Gas Infrastructure Development Cess Act, 2011 and the GIDC Ordinance, 2014. Following those rulings, the GIDC Act, 2015 was enacted in May 2015 with retrospective effect to validate earlier collections under the previous laws.

Under Section 4 of the 2015 Act, the cess collected from gas consumers—excluding domestic and commercial users—was intended to finance major energy infrastructure projects, including the Iran-Pakistan pipeline, the Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline, LNG projects and related ancillary works.

However, the Petroleum Division noted that industrial, fertiliser and CNG consumers challenged the constitutionality of the GIDC Act, 2015 before various high courts. While the Supreme Court, in its August 13, 2020 judgment, upheld the law with retrospective effect, it barred the imposition of fresh cess and allowed recovery of arrears in instalments. Despite this ruling, related cases continued to remain pending in high courts, resulting in large sums remaining blocked.

The Supreme Court had also held that GIDC constitutes a fee rather than a tax, requiring a clear link between the amount collected and the specific infrastructure projects listed in the law. The court observed that failure to pursue these projects could undermine the legal basis of the cess itself.

To address the issue, a high-powered committee on GIDC was constituted by the prime minister in November 2022. Although several meetings were held, progress remained limited due to ongoing litigation. In a subsequent meeting chaired by the finance minister in March 2025, it was agreed that amendments to Section 4 of the GIDC Act were necessary to resolve the dispute.

The Petroleum Division initially submitted a draft amendment to the CCLC, but the proposal was returned in September 2025 with instructions to ensure that the changes remained within the original scope and objectives of the law. The revised draft was later vetted by the Law and Justice Division, which conveyed its concurrence in December 2025. The Finance Division also raised no objection to the proposed changes.

After reviewing the revised summary submitted on January 1, 2026, the CCLC approved the draft GIDC (Amendment) Act, 2025, subject to the incorporation of its recommendations by the Law and Justice Division before the bill is placed before the federal cabinet for final approval.