The base price for petrol for the fortnight starting March 16, 2021, was Rs74 per liter. It was Rs10/ltr lower for Feb 1, 2021 revision. The retail price meanwhile has continued to be maintained at Rs111.9/ltr. Where do the ten rupees go? Yes, it is the Petroleum Levy (PL) that continues to take the hit, as Islamabad struggles to keep pace with rising crude oil prices. The PL has been brought down by Rs10/ltr since February 2021 – and stood at a 30-month low of Rs11.2/ltr for mid-March revision.

Bot March petroleum price revisions have seen the PL brought down under Rs15/ltr for the first time since the IMF program. Recall that Pakistan had agreed to a floor of Rs15/ltr with the IMF for PL, but the political heat and the rising crude oil prices are proving to have the last laugh. Assuming the petroleum consumption remains unchanged month-on-month, March PL collection at Rs17 billion would easily be the lowest in 24 months.

It was as recent as November when the government was charging the maximum allowed Rs30/ltr PL on both the key products – gasoline and HSD. From a high of Rs53 billion monthly collection in November 2020 to Rs17 billion is quite a fall. The reference Arab Light crude oil now averages $69/bbl – a massive 63 percent higher from November 2020.

The PL collection for 3QFY21 is expected to hover around Rs80 billion – which is just 18 percent of the annual target of Rs450 billion. Thanks to the first half that fetched Rs275 billion, helping achieve 61 percent of the target – that the annua target will not be missed by a massive margin.

How the oil prices go from here is anyone’s guess, but the government seems to have made the mind up to not raise the petroleum prices beyond the current level. The low base from last year will also now come into play as Covid had wreaked havoc on oil prices last year around March and April. With the coronavirus showing no signs of abating, movement restrictions in some parts, if not across the entire country, cannot be ruled out – and that could put pressure on petroleum consumption. For all money, there is little juice now left in the PL fruit – and beyond FY21, non-tax revenues would not necessarily be the saving grace.