Oil and gas sector: government sets ambitious target of Rs 486.3 billion revenue collections

The government has set an ambitious target of Rs 486.3 billion revenue collections from oil and gas sector for financial year 2018-19. The government had set revenue expectation from oil and gas at Rs 391.5 billion for the ongoing fiscal year 2017-18 but revised it downward to Rs 278.2 billion. The government had set target of Rs 110 billion for GIDC but actual collection stood at Rs 15 billion following stay orders from courts.
The government has now set ambitious target of Rs 486.3 billon for next financial year on account of revenue collection through oil and gas sectors including petroleum levy, natural gas development surcharge, petroleum levy on oil and LPG and GIDC. In the outgoing year 2017-18, the government had set the target at Rs 78.52 billion for royalty on oil and gas, discount on local crude oil, windfall levy on crude oil and petroleum levy on liquefied petroleum gas (LPG). However, it was later revised downwards to Rs 70.2 billion due to less collection of royalty on gas and windfall levy against crude oil.
A higher target of Rs 300 billion has been set for petroleum levy collection for next year due to increase in the consumption of oil products. For the outgoing year, the target was Rs 160 billion and its collection was projected to rise to Rs 170 billion according to revised estimates. To achieve the target of Rs 300 billion under head of petroleum levy, Financial Bill 2018-19 has proposed an amendment in Petroleum Products (Petroleum Levy) Ordinance 1961 (XXV of 1961). Under the proposal, Rs 30 per litre has been recommended on all POL products. Rs 20,000 per metric ton has been proposed on liquefied petroleum gas (produced/ extracted in Pakistan).
Under the head of GIDC, the government has budgeted lower collections at Rs 100 billion in the next fiscal year due to less recovery during ongoing financial year. The funds gathered from this source were supposed to be spent on gas import projects like liquefied natural gas and pipelines from Iran and Turkmenistan. The government had budgeted Rs 110 billion in the current financial year but actual collection was Rs 15 according to revised estimates.
The gas development surcharge, which is the difference between the prescribed and selling price of gas to provinces, is expected to bring Rs 16 billion in 2018-19. During the current year, the budgeted target was Rs 43 billion but revised estimates were Rs 23 billion due to revision in prescribed gas prices.
The government has set target of discount retained on local crude price at Rs 10 billion, royalty on crude oil at Rs 16.8 billion, royalty on natural gas at Rs 36.5 billion, windfall levy against crude oil at Rs 5 billion and petroleum levy on LPG at Rs 2 billion.