Following a 26 percent year-on-year (YoY) drop in sales of POL products in the fiscal year (FY) 2022-23, the government has incurred a shortfall of Rs. 240 billion on account of the Petroleum Development Levy (PDL).
The inability to achieve FY23 PDL targets can be attributed to reduced OMC sales and the government’s reluctance in increasing PDL charges, according to a report by JS Global.
In order to boost revenue collection, the government introduced PDL on MS and HSD in the previous fiscal year. PDL charges were raised to Rs. 50 per liter for both MS (by November 2022) and HSD (by April 2023), which then helped improve PDL collection despite low volumes throughout the year.
According to the report, PDL collection for FY23 shows a shortfall of Rs. 240 billion compared to the target of Rs. 855 billion. PDL target is one of the key components of the International Monetary Fund’s policy actions. Consequently, the government recently further raised PDL on Petrol by Rs. 5 per liter, taking it to Rs. 55 per liter.
JS Global believes there is a strong likelihood for the government to increase PDL charges to Rs. 60 per liter both for MS and HSD in the near future to meet the ambitious target of Rs. 869 billion set for FY24.
Pressures on tax collection may also invite the imposition of GST charges on these products, currently at zero.
Market Share Trends
Overall market share trend during FY23 showed players broadly remaining resilient in the face of declining overall volumes.
Pakistan State Oil’s overall market share for the month of June dropped to 48 percent, from 54 percent in the same period of last year. On the other hand, HASCOL was a prominent player to gain in shares compared to the previous year over a lower base.
