Govt earns Rs88bn on oil, gas surcharges: Domestic consumers main victims
By Khaleeq Kiani
ISLAMABAD, June 15: The government has earned a Rs88 billion windfall on oil and gas from domestic consumers on the back of higher international prices during the current year, which is about 83 per cent higher than original estimates of Rs48 billion.
This is the highest revenue earning ever made by the federal government on account of oil and gas surcharges, which is in addition to indirect taxes, like 15 per cent sales tax and other federal duties. About Rs70 billion was collected as surcharge on oil and gas in the 1990s.
Budget documents for the next year suggest the highest windfall has come in the shape of petroleum development levy (PDL) that yielded Rs27 billion during the current year against a zero collection target.
The second largest earning came in the shape of gas development surcharge (GDS). The government had set a target of Rs18 billion as the GDS during the current year. However, actual collection on this account has now been estimated at Rs33.32 billion, showing an increase of about 84 per cent.
The collection of royalty on oil and gas was slightly short of target but the loss is negligible at Rs1.98 billion.
The royalties on oil and gas are transferred to the provinces as part of the net proceeds of the divisible pool. Similarly, gas development surcharge also goes to the provinces, depending on their share in gas production. The PDL on the other hand goes to the federal revenue.
The actual collection in oil and gas revenue this year has been about 30 per cent higher than last year’s Rs68 billion when the government had announced collection of a substantial amount in the form of the PDL. The Rs27 billion collection in the form of PDL this year is about Rs5 billion or 22 per cent higher than last year’s Rs22 billion despite the government estimate that it would no more collect the PDL.
This year the government said it was not imposing any PDL on kerosene, diesel and light diesel oil. The PDL received from petrol is being used to subsidise these products by paying off petroleum differential claims (PDC) to the oil companies and refineries.
The government has estimated to pay about Rs25 billion during the current year.
Interestingly, the government has set a PDL collection of Rs25 billion for the next year against an estimated subsidy of Rs15 billion in the form of PDC payments. This means that the government plans to earn Rs10 billion in windfall profit from petroleum development surcharge.
Despite the record collections, the oil companies’ advisory committee (OCAC) has complained to the government that non-payment of price differential claim to the extent of Rs16 billion was causing unbearable losses to the oil companies and refineries.
The OCAC has asked the government that it has suffered a loss of Rs2 billion on account of interest payments on loans they had to obtain to ensure uninterrupted supplies and demanded release of PDC “to save the oil industry from a potential financial collapse”.