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Topline Flash Note: Pakistan Strategy: Supreme Court dismissed review petitions; extends installments to 5 years from 2 years

• As per channel checks, the Supreme Court of Pakistan has dismissed review petitions on Gas Infrastructure Development Cess (GIDC) case. However, the companies will now be required to pay outstanding dues over 60 months (5 years) compared to 24 months (5 years) earlier. The fertilizer association had requested the court to spread the payments over 120 months (10 years).
• Other industries, like Textile and Chemicals, had argued that they have not passed on the impact of GIDC to their consumers. The Supreme Court in coming days is likely to release a detailed judgement where this matter (pass on or not) is likely to be elaborated.
• Nonetheless, we believe extension to 60 monthly payments is a positive for companies affected by the GIDC verdict like EFERT, FFC, FFBL, LUCK, GATM, FML, LOTCHEM, EPCL, BGL, MLCF and CEPB among others.
• GIDC was imposed by the government back in Dec-2011 to raise funds for development of gas infrastructure in the country. GIDC Act provides legal framework which allows government to levy and collect the cess from gas consumers other than domestic sector consumers. According to the Act, the collected amount shall be utilized by the Federal government for Iran Pakistan (IP) gas pipeline, Turkmenistan-Afghanistan-Pakistan-India (TAPI), LNG and other ancillary projects.