ISLAMABAD: Reliance on petroleum levy (PL) has been proposed to be raised by 22 percent in federal budget 2021-22 from Rs 500 billion in the revised estimates of current financial year to Rs 610 billion next year to fetch additional revenue of Rs 110 billion.
The budgeted target is Rs 3 billion higher than what is note in the International Monetary Fund second to fifth review documents.
The government revised its PL collection target upward by 11.1 percent to Rs 500 billion against Rs 450 billion estimates for current financial year 2020-21 under miscellaneous receipts.
The PL collection reached Rs 369.2 billion in first three quarters (July-March) of current financial year which is 73 percent of the revised target for current financial year.
The PL revenue will help the center because this 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 PL has been kept at Rs 30 per litre on all petroleum products, the maximum limit allowed under the Finance Bill 2018, for most of the fiscal year 2020-21. General sales tax, part of the FDP, on two products petrol and high speed diesel (HSD) have been kept at 17 percent.
The government has also proposed a massive raise in Gas Infrastructure Development Cess (GIDC) collection by 420 percent and budgeted Rs 130 billion GIDC collections for 2021-22 against the revised target of Rs 25 billion in 2020-21. In 2020, the Supreme Court of Pakistan in its verdict directed various sectors of economy to clear outstanding GIDC in 60 months.
For petroleum levy on LPG, the government has budgeted Rs 7.6 billion for financial year 2021-22 against Rs 4.7 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 2.9 billion or 61 percent increase more than the revised target of outgoing year.
The budget for 2021-22 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 proposed increase in royalty on both crude oil and natural gas for provinces by 34 percent and 14 percent respectively. The budgeted amount for royalty on crude oil is set at Rs 35 billion for next financial year against the revised estimates of Rs 26 billion for the outgoing year. The government has also budgeted Rs 65 billion in royalty on natural gas in the next financial year against a revised target of Rs 57 billion in 2020-21.
The next year budget envisages Rs 10 billion on account of windfall levy on crude oil against Rs 6 billion for the current financial year 2020-21.
Gas development surcharge - the difference between prescribed and sale price of gas that goes to provinces - is expected to bring Rs 36 billion next year, Rs 27 billion was budgeted in the current year.
Miscellaneous receipts of oil and gas companies are budgeted to generate Rs 913.6 billion in 2021-22 against Rs 661.7 billion revised budgeted for 2020-21 and 43 percent of total collection of miscellaneous receipts for next financial year which are Rs 2079.9 billion.
Copyright Business Recorder, 2021