Pakistan could soon be facing a nationwide shortage of fuel as loads of petroleum cargoes remain stuck at ports over tax dispute, it has emerged.

 

According to The News, the oil industry has warned that the Sindh government’s decision to reinstate a 100% bank guarantee requirement under the Sindh Infrastructure Development Cess (IDC) could disrupt the country’s fuel supply chain within days if the issue is not immediately resolved.

 

The Oil Companies Advisory Council (OCAC), in its letter to the Sindh chief minister (CM) and federal authorities on Monday, said that at least five major petroleum shipments, including vessels carrying petrol and diesel for PSO, HPL, PGL and Parco, are currently awaiting customs clearance at Karachi ports.

 

With petrol stocks at Keamari rapidly depleting, the industry has warned of severe nationwide disruptions, particularly during the ongoing agricultural season.

 

“The oil supply chain is on the brink of collapse. Recovery could take over two weeks if cargoes are not cleared now,” the OCAC said about the dispute centred on the 1.8% IDC levied by the Sindh and Balochistan governments on POL imports.

 

While the Supreme Court is still hearing the case, the Sindh Excise Department has abruptly withdrawn an interim arrangement, previously allowing undertakings instead of bank guarantees, and is now demanding billions of rupees in guarantees per vessel – a financial burden that the industry says it cannot bear.

 

With regulated pricing, tight credit lines and razor-thin margins, the OCAC estimates that IDC adds over Rs3 per litre to the cost of fuel, a burden that cannot be passed on to consumers under current pricing mechanisms.

 

The OCAC pointed out that Punjab and Khyber Pakhtunkhwa (KP) have already exempted POL products from IDC, aligning with federal jurisdiction over petroleum pricing, and urged the Federal Board of Revenue (FBR) as well as Customs to immediately clear all petroleum cargoes without bank guarantees.

 

It also called for a policy-level resolution, including formal recognition of petroleum pricing as a federal subject, inclusion of IDC in fuel pricing mechanisms and a framework to recover past IDC dues.