Buoyant energy sector

It is hardly surprising that the oil and gas sector is the country’s single biggest revenue contributor. In the fiscal year 2016-17, it raised more than Rs1 trillion in revenue — which represents an annual increase of 1.1 per cent over the previous year’s figure of Rs912 billion. What is astounding is that the current revenue collection figure does not include provincial tax collections through oil and gas and taxes arising out of the value addition to oil products such as power generation that is almost 70pc dependent on furnace oil, liquefied natural gas and natural gas.

If anything, this should reinforce the sector’s reputation as a strong engine of growth. Such growth can potentially bring in a rich bonanza of investments from local and foreign concerns. None of this could have happened without the financial and structural reforms undertaken by the government.

Analysts see higher international oil prices, increased consumption and highest sales tax rates as key factors behind the sector’s buoyancy. This has allowed it to make a useful contribution to the national exchequer.

A major chunk of the revenue has been drawn in the past few years from indirect taxes such as general sales tax, customs and federal excise. More than Rs650 billion were generated in 2016-17 or nearly Rs70 billion more than the preceding year. This fiscal year’s collection of petroleum levy was Rs17 billion more than the Rs150 billion target set by the government — a fair improvement of Rs18 billion from the fiscal year 2015-16 and more than double (Rs37 billion) that as compared to the fiscal year 2014-15.

We are living in exciting times and one hopes that as our officials toy with better investment and growth strategies, several new trends may emerge across the value chain that would eventually affect supply, demand and investment. Not only traditional players but new entrants also are expected to play a role. We watch with much interest.

Published in The Express Tribune, September 8^th, 2017.

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