ISLAMABAD: Reliance on petroleum levy (PL) has been proposed to be raised by 455 percent in federal budget 2022-23 from Rs135 billion in the revised estimates of current financial year to Rs750 billion next year to fetch an additional revenue of Rs 615 billion.
The actual PL budgeted for the current year wasRs610 billion, which the government missed by Rs475 billion due to the inordinate increase in its international oil price and the decision taken on February 28, 2022 to withdraw PL on fuel till end June 2022.
The government revised its PL collection target downward by 77 percent to Rs135 billion for current financial year 2021-22 under miscellaneous receipts.
The PL revenue has been given a high priority by subsequent federal governments as it is not part of the Federal Divisible Pool (FDP) that has to be shared with the provinces as per the National Finance Commission (NFC) formula.
POL products’ prices hiked by Rs30 per litre
The maximum limit of PL at Rs 30 per litre on all petroleum products is allowed under the Finance Bill 2018, and it is unclear what amount of the levy would be required to meet the budgeted target of RS 750 billion.
The government has also proposed a massive raise in Gas Infrastructure Development Cess (GIDC) collection - by 700 percent - and budgeted it at Rs200 billion for 2022-23 against the revised target of Rs 25 billion in 2021-22.
In June 2020, the Supreme Court of Pakistan, in its verdict, directed various sectors of the economy to clear outstanding Rs407 billion GIDC in 60 months but the government has yet to realize this amount due to stay orders gotten by various companies.
For PL on LPG, the government has budgeted Rs 8 billion for financial year 2022-23 against Rs 5 billion revised target of current financial year. The rate of PL on LPG has been proposed to be raised to get additional revenue of Rs 3 billion or 60 percent increase more than the revised target for the outgoing year.
The budget for 2022-23 also envisages Rs 20 billion under discount retained on local crude prices. For the current financial year, the revised target is Rs16 billion. Again a rate rise is envisaged to generate additional revenue of Rs 4 billion.
The budget for next year also proposes an increase in royalty on both crude oil and natural gas for provinces - by 15 percent and 16 percent, respectively. The budgeted amount for royalty on crude oil is set at Rs 46 billion for next financial year against the revised estimates of Rs 40 billion for the outgoing year. The government has also budgeted Rs 70 billion in royalty on natural gas in the next financial year against a revised target of Rs 60 billion in 2021-22.
The next year budget envisages Rs 10 billion on account of windfall levy on crude oil against Rs 12 billion for the current financial year 2021-22. Gas development surcharge - the difference between prescribed and sale price of gas that goes to provinces - is expected to bring Rs 40 billion next year, Rs 36 billion was budgeted in the current year.
Miscellaneous receipts of oil and gas companies are budgeted to generate Rs1144 billion in 2022-23 against Rs288 billion revised budgeted for 2021-22 and 57 percent of total collection of miscellaneous receipts for next financial year which are Rs 1999.89 billion.
Copyright Business Recorder, 2022
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