By SKM
October 20, 2025
ISLAMABAD: Pakistan’s downstream oil industry has issued a stark warning of an imminent nationwide fuel supply disruption, following the Sindh government’s decision to reimpose 100% bank guarantees on petroleum imports under the Sindh Infrastructure Development Cess (IDC).
In a letter to key Sindh Chief Minister and provincial authorities, the Oil Companies Advisory Council (OCAC) said the move threatens to paralyze the petroleum supply chain, as multiple cargoes remain stranded at ports awaiting customs clearance.
According to the content of the OCAC letter, the IDC, imposed by the Sindh and Balochistan governments since 1994, has been a subject of protracted legal dispute. Although the Sindh High Court upheld the cess in 2021, the matter remains sub judice before the Supreme Court and the Balochistan High Court.
Meanwhile, the industry had continued imports based on previous understandings that allowed submission of undertakings instead of bank guarantees — a practice supported by the Ministry of Energy (Petroleum Division) and the Oil and Gas Regulatory Authority (OGRA).
However, in a recent policy shift, the Sindh Excise and Taxation Department reinstated the requirement for full bank guarantees at the time of goods declaration. The OCAC argues that this requirement is financially unsustainable, citing the thin margins and limited credit lines within the industry. A typical 50,000 metric ton vessel, valued at approximately USD 40 million, would require billions of rupees in bank guarantees.
“The imposition of IDC at 1.8% adds more than PKR 3 per litre to product costs, which will eventually burden consumers, as petroleum prices are regulated by the federal government,” the OCAC warned.
The Council highlighted that key cargoes — including PSO’s MT Al-Salam II, which has already discharged High-Speed Diesel at FOTCO, and HPL’s MS vessel MT Hafnia Australia — are awaiting customs clearance. Additionally, two Motor Spirit (MS) cargoes at Karachi Port Trust (KPT) are yet to be cleared, risking a critical shortage, particularly at Keamari.
Upcoming cargoes, including Wafi Energy’s MS shipment and PARCO’s crude vessel, due to arrive on October 21, could also face delays if the issue remains unresolved.
“With the ongoing agricultural season, any disruption in fuel supply could halt activity across the country and would take over two weeks to normalize,” the OCAC said.
The Council has urged the federal government to immediately intervene and instruct the Federal Board of Revenue (FBR) and Customs authorities to allow clearance of POL cargoes without bank guarantees. It also called for a broader policy resolution — including incorporation of IDC into petroleum product pricing and a mechanism to recover past dues — to prevent recurring disruptions.
The OCAC noted that the governments of Punjab and Khyber Pakhtunkhwa have already exempted petroleum products from the IDC, recognizing fuel pricing as a federal mandate. Ends
