Govt aims to collect Rs588b revenue from oil, gas

Higher target set at a time when petroleum demand has gone down


​ Our Correspondent June 13, 2020
PHOTO: Reuters

KARACHI: budgetThe government has set an over-ambitious revenue collection target of Rs588 billion from oil and gas production and sales in the next fiscal year, according to budget documents.

The collection target is up by 52% or Rs202 billion compared to Rs386.5 billion projected for outgoing fiscal year 2019-20.

The higher collection target comes at a time when demand for oil and gas has contracted notably due to sluggish economic activities in challenging times under the coronavirus pandemic.

The overall demand for industrial products has dropped as the income and purchasing power of people has shrunk due to the lockdown imposed to contain the spread of Covid-19 in the country.

More importantly, oil marketing companies (OMCs) have continued to import cheaper oil and gas instead of purchasing petroleum products from local refineries whose prices are comparatively higher.

The low demand for local products has forced oil and gas exploration firms to keep production low in fields.

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The government has set a revenue collection target of Rs450 billion on account of petroleum levy on sale of oil products in FY21 compared to the estimate of Rs260 billion for FY20.

The estimated collection is higher than the original target of Rs216 billion for FY20, the budget document showed.

The government has targeted to collect Rs15.9 billion on account of gas development surcharge in FY21 compared to estimated Rs9.8 billion in FY20.

The collection target is set at Rs15 billion for the gas infrastructure development cess (GIDC) in FY21 compared to Rs11 billion estimated to be collected in the outgoing fiscal year.

The estimated collection is one-third of the original target of Rs30 billion for FY20.

The government has set a revenue collection target of Rs17 billion on account of discount retained on local crude price in FY21 compared to Rs16 billion estimated to be collected in FY20. It has set a revenue collection target of Rs5.5 billion from petroleum levy on liquefied petroleum gas (LPG) next year compared to Rs3.6 billion estimated to be collected in the outgoing fiscal year.

The estimated collection is lower than the original target of Rs4 billion for FY20.

The government aims to collect Rs8 billion on account of windfall levy against crude oil in FY21 compared to estimated receipt of Rs7 billion in FY20. It has set the revenue collection target of Rs53.8 billion from royalty on natural gas compared to Rs54 billion estimated to be collected in FY20.

The estimated collection is higher than the original target of Rs51 billion for FY20.

The government has fixed a revenue collection target of Rs23 billion from royalty on crude oil in FY21 compared to estimated collection of Rs25 billion in FY20.

The estimated collection is slightly higher than the original target of Rs24.7 billion for FY20.

Published in The Express Tribune, June 13th, 2020.

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