ISLAMABAD: The federal government has proposed an increase in petroleum levy to Rs 80 per litre on petrol and diesel (HSD) in the Finance Bill, as opposed to the current maximum limit of Rs 60 per litre, to generate Rs 1,281 billion for the next fiscal year 2024-25.
This amount is Rs 201 billion higher than what was projected for next year under this head by the International Monetary Fund in its second and final review under the Stand-By Arrangement (SBA) dated May 2024.
The government has proposed a raise in the petroleum levy (PL) rate on other petroleum products like high octane blending component (HOBC), Light Diesel Oil (LDO), and E-10 Gasoline from Rs 50 to Rs 75 per litre. However, the PL rate for superior kerosene oil (SKO), widely used for cooking purposes, remains at Rs 50 per litre.
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While the originally budgeted PL for the outgoing year was Rs 869 billion, the budgeted amount for next year represents an increase of 47.4 percent.
The PL revenue has been given a high priority by successive 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.
The government has also proposed to maintain the Gas Infrastructure Development Cess (GIDC) collection at Rs 2.5 billion for the fiscal year 2024-25, identical to the revised target set for the current financial year. The GIDC was originally budgeted at a much higher amount of Rs 40 billion for the current fiscal.
In June 2020, the Supreme Court of Pakistan ruled that various sectors of the economy must clear outstanding Rs 407 billion GIDC in 60 months but the government has yet to realize this amount due to stay orders obtained by various companies.
Natural Gas Development Surcharge (GDS) - the difference between prescribed and sale price of gas that goes to provinces - is projected to bring Rs 25.618 billion next year against budgeted Rs 40 billion and revised Rs 27.169 billion in the current year.
On the directives of Finance Ministry, Auditor General of Pakistan (AGP) is auditing the GDS claims of both gas Companies-Sui Northern Gas Pipeline Limited (SNGPL) and Sui Southern Gas Company (SSGC) to ascertain the real collection.
The government has also envisaged to collect Rs 3.537 billion for the PL on Liquefied Petroleum Gas (LPG) in fiscal year 2024-25. This is compared to the revised target of Rs 3.516 billion for the current fiscal year. The original budget for the PL on LPG in the current fiscal year was significantly higher, at Rs 12 billion.
The budget for fiscal year 2024-25 envisaged Rs 25 billion to be retained as a discount on local crude oil prices. This is the same amount as the revised estimate for the current fiscal year (2023-24). The original budget for the current year was lower, at Rs 20 billion.
The budget for next year also proposes a decrease in royalty on crude oil and increase in royalty on natural gas for provinces. The budgeted amount for royalty on crude oil is set at Rs 58.654 billion for next financial year against the revised estimates of Rs 57.017 billion for the outgoing year. The government has budgeted Rs 103.751 billion in royalty on natural gas in the next financial year against a revised target of Rs 93.567 billion and budgeted Rs 75 billion in 2023-24.
The next year’s budget envisages Rs 28 billion on account of windfall levy on crude oil against budgeted amount of Rs 20 billion for the current financial year 2023-24. Windfall levy on gas has been budgeted at Rs 400 million which was Rs 220 million in current fiscal year.
Miscellaneous receipts of oil and gas companies are budgeted to generate Rs1528.46 billion in next financial year against a revised target of Rs 1197.8 billion and budgeted estimates of Rs 1141 billion in the outgoing financial year.
Copyright Business Recorder, 2024
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