While the federal budget FY24 may well be more of a wish-list, the government seems to have got the expectations from Petroleum Levy right this time around. Of course, getting close to the target would still require many things falling in place for the authorities – but if the worst if behind us, achieving Rs869 billion in PL revenues for FY24 should not be a herculean task.

On the face of it, a 60 percent year-on-year jump in revenues on petroleum consumption is a big jump. But this is coming on the back ofa fiscal year that was really a tale of two halves. The federal government was indecisive in the first few months of holding office, whether to roll back subsidies or not, and waited till the IMF made in clear terms that taking the levy to the maximum limit in phased manner on both petrol and diesel was the only way to go about.

Also recall that the petroleum consumption drastically went down in FY23, down 23 percent in 10 months to an average of 1.37 billion liters a month for diesel and petrol combined. This is easily the biggest slump in year-on-year petroleum consumption, and course correction should be around the corner. Getting back to the highs of 1.8 billion liters monthly consumption at current retail rates is almost out of question – but the slowdown should be arrested, all other things constant.

Contrary to expectations, the government refrained from increasing the maximum PL limit from Rs50/ltr, but that can happen anytime if needed by just the stroke of a pen. At Rs50/ltr, achieving the yearly PL collection target of Rs869 billion – sales would have to grow by a modest 5 percent year-on-year. If the GDP indeed grows close to the government target –a 5 percent increase in petroleum consumption from a base as low as FY23’s is a given.

Needless to say, a lot will also depend on international crude oil prices, which refuse to go down. Saudi Arabia’s surprise production cut has indicated that Opec Plus would do whatever it takes to keep prices high going deep into 2024. That, and Pakistan’s internal political situation will be a key determinant to what happens with PL collection.

Pakistan tends to behave differently when not under the IMF watch, and that increasingly looks like a possibility by as soon as the end of this month. The next program will almost certainly be negotiated with the new government (assuming there ARE elections in Pakistan this October). Without the IMF and with elections approaching fast; if the crude oil prices offer no reprieve, do not be surprised if PL revenues become the first casualty in the name of public relief.