Wednesday September 22, 2021

Govt targets Rs610 bn Petroleum Levy in budget

The government had so far collected Rs369 billion Petroleum Levy in the first nine months (July-March) period
File photo
File photo

ISLAMABAD: The government has envisaged Petroleum Levy to the tune of Rs610 billion in the budget 2021-22 against revised estimates of Rs450 billion for the outgoing fiscal year ending on June 30, 2021.

The government had so far collected Rs369 billion Petroleum Levy in the first nine months (July-March) period of the outgoing fiscal year and is eyeing to collect Rs81 billion in the last quarter (April-June) period to materialise the desired figure of Rs450 billion for the outgoing financial year.

In order to jack up the Petroleum Levy up to the desired levels, the government will have to increase the Petroleum Levy on MS Petrol to Rs25 to Rs30 per liter, then the government could collect Rs300 billion in next financial year.

It will not be easy for the politically-elected regime to impose Rs25 to Rs30 per liter Petroleum Levy on MS petrol and HSD amid increasing oil prices in the international market.

Saudi Arabia’s energy minister had recently stated that a new super cycle in global oil prices can be triggered by lack of new investment in explorations. Prince Abdulaziz bin Salman, who has been warning speculators against bearish nets on oil, however, told investors his job is to not let such a super cycle happen.

In Pakistan, if the government decided jacking up the Petroleum Levy of Rs25 per liter on HSD, then it could collect Rs276 billion. So with the maximum levy, the collection could go up to Rs576 billion in the next fiscal year. The exact consumption of kerosene is not fully known, so it can be assumed that the government can collect the desired amount of Rs610 billion in the next fiscal year.

With Petroleum Levy of Rs15 per liter, the government could collect Rs288 billion on MS petrol and HSD in next 12 months.

At the moment, the government is charging Rs3.61 per liter on HSD and Rs2.97 per liter on MS petrol. The government had to jack up the POL prices on June 16, 2021 for the next fortnight and the MS Petrol went up by Rs2.13 per liter to Rs110.69 per liter, HSD by Rs1.79 per liter to Rs112.55 per liter. The price of Kerosene stands at Rs81.89 per liter after witnessing an increase by Rs1.89 per liter.

The price of Light Diesel Oil went up by Rs2.03 per liter and stands at Rs79.68 per liter in the country. Pakistan’s consumption of Petroleum Products (POL) ranges around 9.2 to 10.2 billion liters of High-Speed Diesel (HSD) and MS Petrol on annual basis respectively, thus, the government can collect Rs100 billion maximum with the existing level of Petroleum Levy in the next fiscal year. Crude oil’s local extraction and imports reached 68.9 million barrels in Jul-Mar 2021.

Similarly, in Jul-Mar 2021, consumption of petroleum products increased to 14.7 million tons from 12.5 million tons in the period under discussion. Oil storage of 38,579 metric tons was added in the country’s logistics during the period of Jul-Mar, 2021 at the cost of Rs5,786.8 million.