The government has decided to digitally track every litre of petroleum products at every step of the process to reduce petroleum theft, smuggling, adulteration and misappropriation. According to reports, authorities will track fuel in real-time, following processes related to import, refinement, storage, transit, and final sale.

 

The National Assembly passed the Petroleum Amendment Act 2025 earlier this week, allowing authorities to monitor petroleum products through digital systems and with the help of enforcement agencies. This could lead to annual revenues potentially increasing by up to Rs500 billion.

 

The amendment makes changes to the nine-decade-old Petroleum Act 1934.  Under the amendment, deputy and assistant commissioners will be given enforcement powers, such as seizing illegally stored or smuggled petroleum products. The Oil and Gas Regulatory Authority (Ogra) has reportedly engaged with market stakeholders to guarantee a seamless transition to the new system. 

 

The amendment spells great news for domestic refineries and oil marketing companies, as oil and gas companies have been campaigning for a crackdown on smuggling, which hurts businesses that are compliant with the legislation.

 

Fuel stations that purchase smuggled petroleum products evade taxes and duties, allowing for the generation of supernormal profits for all those involved in the malpractice.

 

The new digital system is expected to encourage pump owners to comply with the law, as ensuring that every entity is subject to the same rules will reduce the incentive to avoid compliance. Moreover, the government has also decided to slap fines on petroleum businesses that engage in dishonest behaviour. 

 

A Rs1 million fine on any company convicted of importing, storing, refining, moving or supplying illegally procured petroleum products. To discourage individuals from repeatedly engaging in the illegal sale of petroleum, those found to be violating the legislation repeatedly will have to face a larger fine of Rs5 million.

 

Moreover, the owner of a facility with an invalid license will be liable to pay a Rs10 million fine to the government. Facility owners who possess an expired licence will be given six months to ensure their licences are renewed, after which they can be fined Rs1 million for non-cooperation.

 

Any facility found to be storing or trading smuggled petroleum will be sealed immediately, along with a seizure of all assets. Reports reveal that such facilities will also face a fine of Rs100 million.