ISLAMABAD: Though the government failed to achieve the revenue target for the outgoing fiscal year, it has come up with an ambitious goal of revenue receipts from oil and gas companies for the next year.
Initially, the government had expected to receive Rs391.5 billion from oil and gas companies in FY18, but it later pushed the target downwards to Rs278.2 billion.
The major hit came in the collection of gas infrastructure development cess (GIDC) as against the target of Rs110 billion, actual collection stood at just Rs15 billion following stay orders from courts.
The target for revenue collection from oil and gas companies has been fixed at Rs486.3 billon for the next financial year. According to the breakdown, targets for petroleum levy on oil and liquefied petroleum gas (LPG), gas development surcharge and GIDC have been set. However, it did not include the general sales tax on petroleum products.
For the outgoing year, the government had set the target at Rs78.52 billion for the collection of royalty on oil and gas, discount retained on local crude oil price, windfall levy on crude oil and petroleum levy on LPG.
However, it was later revised downwards to Rs70.2 billion due to lower collection of royalty on gas and windfall levy on crude oil.
For the next year, the projection is higher at Rs101.3 billion because of the spillover effect of increased international crude oil prices on the royalty on locally produced crude oil and gas.
A higher target of Rs300 billion has been set for the receipt of petroleum levy next fiscal year in the wake of increase in consumption of oil products. For the outgoing year, the target was Rs160 billion, but the collection was projected to rise to Rs170 billion according to revised estimates.
For the collection of GIDC, the target has been lowered to Rs100 billion for the next fiscal year, taking cue from lower receipts in the outgoing year.
The collection made under this head was supposed to be spent on gas import projects like liquefied natural gas (LNG) purchase and gas pipelines from Iran and Turkmenistan, but the government utilised it to bridge the growing budget deficit. The GIDC target for the outgoing year was Rs110 billion, but actual collection was projected to be Rs15 billion according to revised estimates.
Gas development surcharge – the difference between prescribed and sale prices of gas that goes to provinces – is expected to bring Rs16 billion next year. In the outgoing year, its target was Rs43 billion, but receipts would be Rs23 billion because of revision in prescribed gas prices.
Further breakdown suggests that the government has set the target for the discount retained on local crude price at Rs10 billion, royalty on crude oil at Rs16.8 billion, royalty on natural gas at Rs36.5 billion, windfall levy on crude oil at Rs5 billion and petroleum levy on LPG at Rs2 billion.
Published in The Express Tribune, April 28th, 2018.