Govt collected Rs75b in petroleum levy

ISLAMABAD: The government’s petroleum levy (PL) collection reached Rs75 billion in July 2023, marking a significant revenue source for the federal government. This levy is not part of the divisible pool and increased to Rs55 per litre on petrol, contributing to the surge in revenue.

If this pattern endures over the remaining 11 months of the current fiscal year, the government could surpass its PL target of Rs869 billion by Rs31 billion.

In July, petroleum consumption decreased by 6 per cent compared to the same period last fiscal year. However, month-on-month consumption of petroleum products remained steady in July 2023.

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According to Business Recorder, sources from the Petroleum Division expressed concerns about potential further consumption declines that could hinder meeting budget targets. In such a scenario, the government plans to elevate the PL to the maximum limit of Rs60 per litre, as stipulated by the IMF under the Stand By Arrangement (SBA) and Finance Act 2023-24.

For the present month, the government anticipates PL collection of Rs70 billion, following the recent rise of Rs17.50 and Rs20 per litre on petrol and high-speed diesel prices respectively.

The government’s commitment to the IMF’s ongoing SBA includes reaching an average rate of Rs55 per litre over the fiscal year, which would add an extra Rs79 billion. Currently, the government imposes a petroleum levy of Rs55 per litre on petrol and Rs50 per litre on high-speed diesel.

The prospect of increased PL on petroleum products raises concerns over inflation, impacting transportation costs and input expenses for the productive sectors.

Experts in the oil sector predict further petrol price increases by the end of this month due to the rupee’s depreciation against the US dollar, which could further dampen petrol consumption.