ISLAMABAD, Dec 3: The federal government has collected Rs29 billion revenue on account of surcharge and royalties on oil and gas and defence earnings during the first quarter of the current fiscal year , more than Rs8 billion higher than the quarterly target of Rs20.7 billion.

This is the major reason the government continues to keep the petroleum prices unchanged despite increase in international oil prices that results in higher rate of royalties as a windfall, informed sources told Dawn on Friday.

Official data submitted to the International Monetary Fund (IMF) and put on the finance ministry's website suggest that annual revenue from two heads i.e. petroleum revenue and defence earnings as a result of Pakistan's support to the United States in war against terror, is likely to be Rs120 billion, exactly Rs30 billion higher than budgeted target of Rs90.7 billion.

This will be in addition to the higher tax revenue as a result of increased export and imports and higher than targeted profits from public sector investments, joint ventures, shareholding in privatized entities and public sector companies which together is estimated to be in excess of Rs55 billion.

The federal government has earned a total revenue of Rs12.6 billion on account of oil and gas surcharges and royalties during the first quarter (July-September) of the current fiscal year against a quarterly average target of Rs19.7 billion.

The government had estimated royalties on oil and gas at Rs16.6 billion for the whole year in the federal budget 2004-05. It has earned Rs4.324bn on this account in the first quarter. If this pattern continues, the annual revenue, on account of royalty on oil and gas, would amount to Rs17.3bn or Rs700m higher than the target.

Similarly, the government had set an annual target of Rs15bn for the gas development surcharge. It has earned Rs4.661bn in the first three months of the fiscal year. This means an annual revenue of Rs18.6 billion or 3.6 billion higher than the target.

The government expected Rs47.5bn revenue as surcharge or development levy on petroleum products in the budget. It has collected Rs3.597 billion in the first three months which means the annual revenue on this account will stand at Rs14.4 billion or Rs33 billion less than the annual target.

If the two heads of oil and gas surcharge are put together, the government had a total revenue target of Rs62.5 billion and it has recovered Rs8.258 billion. In this way, the total revenue under the petroleum surcharge head is expected to be around Rs33 billion at the end of the year, which would be again Rs30 billion lower than the target.

This loss would be partially offset by about Rs3.6 billion higher earnings on account of royalties on oil and gas. However, the loss in petroleum revenue of about Rs26 during the whole fiscal year would be effectively converted into profit on account of more than five times higher defence earnings.

The government had set an annual target of Rs11.6 billion revenue from defence services. The target has substantially been surpassed in the first quarter of the current fiscal year. The defence revenue during the first three months of the year has been Rs17.166 billion.

The government is expected to maintain same pattern in defence earnings owing to its continuous support to the US. The official data also revealed that expenditure on public sector development programme (PSDP) during the first quarter has stood at Rs32 billion, or Rs18 billion lower than average quarterly target of Rs50.5 billion.

If the spending pattern on development schemes continues, like every year, the government would end up utilising about Rs130 billion against an annual allocation of Rs202 billion.

The multilateral lenders have been saying that slow fund utilization for development in the initial period of the fiscal year results in hasty releases in the last two months of the year compromising the quality of implementation.