ISLAMABAD, June 15: The budget 2002-03 announced by the finance minister on Saturday abolished 10 per cent guaranteed rate of return to three oil refineries, slightly reduced petroleum development levy and imposed duty on the import of finished POL products.

The finance minister also announced to deregulate the import of all the petroleum products with effect from July 1, 2002 to allow oil companies to import all POL products freely.

With these adjustments, the petroleum sector revenue collection was estimated at Rs60.5bn for fiscal 2002-03 against revised budgets estimates of Rs53bn for the year ending June 30, 2002.

The petroleum surcharge has been estimated to increase from budget estimates of Rs32bn in 2001-02 to Rs45bn in 2002-03, showing an increase of 40pc.

As part of the de-regulation of the oil sector, it has been decided to abolish the minimum 10 per cent rate of return guaranteed for the National Refinery, Pakistan Refinery and Attock Refinery and allow them to compete in the market through tariff protection formula.

For this purpose, import duty at 10 per cent ad valorem on import of HSD and 5 per cent ad valorem plus 1 per cent surcharge on import of kerosene oil, light diesel oil and JP-4 has been made in the budget 2002-03.

However, excise duty on these products has been abolished and petroleum development levy reduced to minimize the impact of this measure on the retail prices.

The receipts from GDS are transferred to the provinces according to well-head production ratios. These receipts form a major source of revenue for the provinces of Balochistan and Sindh. The revised estimates of GDS for the current financial year are Rs14.9bn and the budget estimates for next year are Rs15bn.

The receipts from petroleum development levy were estimated at Rs32bn for the year 2001-02. Previously the refineries were paid a minimum guaranteed return out of the levy.

As these were not paid on time, arrears against the government built up. During the year, accumulated arrears amounting to Rs13.5bn were settled and adjusted against government receivables from these refineries and the system was cleaned up, said the minister. The revised petroleum levy receipts are estimated at Rs39bn compared with next year projects of Rs45.5bn.

Significant support was made available during the outgoing year to both Wapda and KESC to provide relief to agriculture and domestic consumers and to limit their tariff increase to bearable levels.

In particular, Rs83bn in accumulated losses of KESC are being picked up, including an injection of Rs15bn this year to keep it afloat. In the case of Wapda, for the third consecutive year, its debt servicing payable to government has been absorbed in the budget. This year, a cost of Rs20bn was picked up in the budget on this account.