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ISLAMABAD: The government collected Rs 75 billion in July 2023 on account of petroleum levy (PL), a key source of revenue for the federal government as it is not part of the divisible pool, due to an increase in the levy to Rs 55 per litre on petrol.

If this trend is sustained for the remaining 11 months of the current year, the government will be able to exceed its ambitious PL budgeted target of Rs 869 billion by Rs 31 billion.

Petroleum consumption declined by 6 percent in July, the first month of the current fiscal year, compared to the same month last fiscal year. On month-on-month basis, consumption of petroleum products remained unchanged in July 2023 compared to the previous month.

Prices of petrol, diesel increased by upto Rs20

An official of Petroleum Division on condition of anonymity said that the government is concerned about a further decline in consumption that may compromise its ability to meet the budgeted targets. He; however, added that in that case the government intends to increase PL to Rs 60 per litre, the maximum limit as per an agreement with the IMF under the Stand By Arrangement (SBA) and a component of the Finance Act 2023-24.

The government has estimated generation of Rs 70 billion PL collection in the current month subsequent to Rs 17.50 and Rs 20 per litre raise in petrol and high speed diesel (HSD) prices, respectively, the official said.

The government pledged to the IMF under the ongoing SBA that it will follow the path of increase to reach an average rate over the current fiscal year of Rs 55 per litre which will add an extra Rs 79 billion. At present the government is charging Rs 55 per litre PL on petrol and Rs 50 per litre on HSD.

Any increase in PL on petroleum products will fuel inflation by increasing the cost of transportation (goods and people) and increasing input costs for the productive sectors.

Oil sector experts said that petrol prices are expected to further increase by the end of this month mainly due to ongoing depreciation of rupee against US dollar which would further reduce petrol consumption in the country.

The government realised Rs 580 billion PL during last fiscal year against the target of Rs 855 billion with shortfall of Rs 275 billion.

In first quarter (July-September 2022) the collection of PL was Rs 47.476 billion due to lower rate of PL of Rs 10 on petrol and Rs 5 on HSD. However, the collection increased to Rs 177.805 billion in first two quarters (July-December) and Rs 362.480 billion in first three quarters of last fiscal year (July-March 2023).

Total consumption of petroleum products fell by 27 percent year-on-year in fiscal year ended June 30, 2023. It fell to 16.61 million metric tons in 2022-23 (July-June) from 22.6 million metric tons in the previous year 2021-22.

Copyright Business Recorder, 2023

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Tulukan Mairandi Aug 22, 2023 06:52am
Straight into debt collector China pocket
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imdad kolori Aug 22, 2023 10:03am
kill the middle class - the peasants and the masters only two classes in pak -
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Az_Iz Aug 22, 2023 04:47pm
People in wealthy countries, like in the West , as well as poorer countries like India, pay as much, if not more, for petrol and diesel.
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