ISLAMABAD: Pakistan risks a nationwide fuel shortage after several petroleum cargoes were held at Karachi ports following the Sindh government’s decision to reinstate a 100% bank guarantee requirement under the Sindh Infrastructure Development Cess (IDC).
The Oil Companies Advisory Council (OCAC) has warned that the country’s fuel supply chain could collapse within days if the matter is not urgently resolved.
Five Major Shipments Awaiting Clearance
In a letter to the Sindh chief minister and federal authorities, the OCAC said that five major petroleum vessels, carrying petrol and diesel for PSO, HPL, PGL, and Parco, remain stuck at Karachi ports due to customs delays.
With petrol stocks at Keamari rapidly running out, the industry fears severe disruptions nationwide, especially 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 cautioned.
IDC Dispute Deepens Financial Strain
The conflict centers on the 1.8% IDC imposed by the Sindh and Balochistan governments on petroleum imports (POL).
Although the Supreme Court is still hearing the case, the Sindh Excise Department recently revoked an interim arrangement that allowed undertakings instead of bank guarantees.
It now demands billions in guarantees per vessel, a burden the oil industry says it cannot sustain.
With regulated pricing, tight credit lines, and slim margins, the IDC adds over Rs3 per litre to fuel costs — an amount that cannot be passed to consumers under existing pricing formulas.
Industry Calls for Federal Intervention
The OCAC urged the Federal Board of Revenue (FBR) and Pakistan Customs to clear petroleum cargoes without bank guarantees and proposed a policy-level resolution.
Its recommendations include:
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Formal recognition that petroleum pricing is a federal subject;
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Inclusion of IDC in fuel pricing mechanisms;
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A framework to recover past IDC dues.
The council highlighted that Punjab and Khyber Pakhtunkhwa have already exempted POL products from IDC, aligning with federal jurisdiction.
Risk of Economic Fallout
Without immediate government action, Pakistan could experience fuel station dry-outs, transport and logistics disruptions, and agricultural delays, the OCAC warned.
Such outcomes could trigger wider economic instability, compounding existing inflationary and supply chain pressures.
