Petroleum revenues to dry

Petroleum sales numbers for March read a grim picture. On month-on-month basis, it surprisingly showed more resilience than was expected. It is highly likely that people went for filling the tanks in the last week, as the prices went down by 12-13 percent. With the lockdown in place for significantly greater period than March – and almost countrywide – the April volumes are sure going to be much lower.

What does this mean for the petroleum revenues? It means trouble. Should the FY20 petroleum volumes dry even by 25 percent from 3QFY20 – the FBR should expect significantly less in terms of GST. Back of the envelope calculations suggest – that at prevailing “relief” petroleum prices, GST for 4QFY20 could be no more than Rs33 billion – the lowest quarterly number in at least 28 quarters.

The Petroleum Levy (PL) could also be lowest in at least six quarters at Rs49 billion. This will still be more than enough in terms of the PL collection target for FY20, 95 percent of which has been achieved in 9MFY20. All said, even with low sales in the ongoing quarter, the government is likely to have pocketed the highest ever in terms of PL and GST combined – mainly at the back of higher tax incidence in the previous two quarters.

The 3QFY20 revenues have also fallen on the lower side – despite highest-ever PL incidence and standard GST at 17 percent. All this while, it must not be forgotten that the masses have been robbed off, in the name of “relief”, as the base price has not entirely been passed on to the end consumer. If the subsidy of Rs3 billion on sugar could cause this much havoc, could a bigger and more visible robbery – be ever spotted and be ordered to be enquired upon by the likes of FIA?