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| May 14, 2005 | Saturday | Rabi-us-Sani 5, 1426 |
Rs2bn compensation for oil companies
ISLAMABAD, May 13: The federal government will pay Rs2 billion to oil companies and refineries next week to compensate them for the losses they suffered on account of price differential in the last two months, it has been learnt. A government official told Dawn that the government’s decision to freeze oil prices at the current level had deprived the oil companies and refineries of their legitimate profit in the last six weeks.
The Pakistan State Oil (PSO) will get Rs1.190 billion, Shell Rs360 million, Parco Refinery Rs140 million and Caltex Rs100 million.
The National Refinery, the Pakistan Refinery and the Attock Refinery will get Rs30 million each while Total-Parco, Attock Petroleum and Admore will get Rs60 million, Rs40 million and Rs10 million respectively.
The official said that though the government’s revenue from the oil and gas sector had gone up in the nine months of the current fiscal year, its decision to freeze oil prices early last month to contain inflation had neutralized its revenue through the petroleum development levy.
He said the government’s target had been to earn Rs47 billion through the levy this fiscal, but except for a 22 per cent increase in POL products in three months (from December to February), its prices had remained unchanged since May 2004.
The official said the government had not only been unable to achieve its target through the levy but it was likely to incur an additional expense of $1.5 billion on a higher import bill.
The government has estimated that the bill for importing oil would rise to $5.5 billion next year because of increase in oil prices in the international market.
Budget estimates hint oil import bill for crude would go up to $2.9 billion next year to be followed by a $2.08 billion bill for importing diesel and furnace oil.
Sources said next year’s foreign exchange estimates have been based on these import costs.
The petroleum sector would devour major part of the foreign exchange reserves this year and the next, they said.
The government had estimated around $3.5 billion in the current budget for importing oil. The figure has now been revised to $4.66 billion because of higher oil prices.
This suggests that the government will not only have to look for alternate sources of revenue to meet shortfalls in the PDL but its balance of payment position would also continue to deteriorate for the second consecutive year.
The increase in the petroleum imports would be on two counts — increased consumption of high speed diesel and furnace oil and higher oil prices in the international market.
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