ISLAMABAD: The government will meet the remaining 40 percent of the Rs 450 billion budgeted petroleum levy (PL) target by the end of current financial year 2020-21.

This was stated by Ministry of Finance and Federal Board of Revenue officials to Business Recorder. Notwithstanding the reduction in the rate of PL for the second half of February, Finance Division is optimistic that it would be able to collect Rs 175 billion PL by end-June which is 40 percent of total collection, sources in petroleum division said.

The budgeted target of Rs 450 billion generated through PL in current financial year is 73 percent higher than last financial year's revised target of Rs 260 billion.

The collection of PL has already registered a 102 percent increase during the first half of the current fiscal year, according to Finance Division data - it rose to Rs275.3 billion during July–December 2020-21 as compared to Rs136.4 billion in the corresponding period of last fiscal year.

If the government is unable to raise PL rates for the remaining period of the current fiscal year second half of current financial year it would still fetch Rs175 billion with the proviso that consumption of POL stays the same as during the first half of current financial year, a petroleum expert on condition of anonymity told Business Recorder.

On Monday, after the fortnightly review of petroleum products, the government decided to keep prices unchanged by reducing PL by Rs3.07 on petrol - to Rs17.97 per litre from Rs21.04. The rate of PL on HSD was reduced by Rs3.75 per litre to Rs18.36 against Rs22.11 per litre; PL on kerosene was also brought down by Rs2.78 per litre to Rs2.76 instead of Rs5.54 per litre and PL on light diesel oil (LDO) was reduced by Rs3.26 to Rs3.65 from Rs6.91 per litre. The reduction in PL has been adjusted in increase of ex-refinery prices of Petroleum products.

The petroleum levy is 8 percent of total federal tax revenue budgeted for 2020-21 including taxes collected by Federal Board of Revenue and other taxes. The increase in reliance on PL maybe attributable to the fact that the total amount collected under this head is retained by the federal government whereas any rise in general sale tax (GST) has to be shared with the provinces as per the prevalent NFC Award.

Oil and Gas Regulatory Authority (OGRA) had recommended Rs14.07 per litre increase in petrol, Rs13.61 in HSD, Rs10.79 in kerosene and Rs7.43 in LDO for second half of February. However, government decided to keep the rate unchanged as it was facing severe criticism as it had raised the rate during the previous five consecutive fortnights.