- Oil shipments remain blocked at Karachi ports.
- Five large gasoline and diesel vessels are awaiting authorization.
- Sindh reinstates 100% IDC bank guarantee requirement.
Pakistan is facing the risk of a nationwide fuel shortage as several oil shipments remain stuck at ports following the Sindh government’s decision to reinstate a 100% bank guarantee requirement under the Sindh Infrastructure Development Cess (IDC).
The oil industry has warned that the move could disrupt the country’s fuel supply chain within days if the problem is not resolved quickly, News reported Tuesday.
The Oil Companies Advisory Council (OCAC), in its letter written on Monday to the Sindh Chief Minister and federal authorities, said that at least five major oil shipments, including vessels carrying petrol and diesel for PSO, HPL, PGL and Parco, are currently awaiting customs clearance at Karachi ports.
As stocks of Motor Spirit (petrol) in Keamari are rapidly depleting, the industry has warned of serious disruptions nationwide, especially during the current agricultural season, if immediate action is not taken.
“The oil supply chain is on the verge of collapse. Recovery could take more than two weeks if cargoes are not cleared now,” OCAC added. The dispute centered on the 1.8% IDC levied by the Sindh and Balochistan governments on POL imports. While the Supreme Court is still considering the case, the Sindh excise department abruptly withdrew an interim agreement, previously allowing undertakings instead of bank guarantees, and is now demanding billions of rupees in guarantees per vessel, a financial burden the industry says it cannot bear.
With regulated prices, tight credit lines and razor-thin margins, OCAC estimates that IDC adds more than Rs 3 per liter to the cost of fuel, a burden that cannot be passed on to consumers under current pricing mechanisms.
The council urges the Federal Board of Revenue (FBR) and Pakistan Customs to immediately clear all oil shipments without bank guarantees, and calls for a political resolution, including i) formal recognition that oil prices are a federal issue; ii) inclusion of IDC in fuel pricing mechanisms and iii) a framework to recover past IDC contributions.
OCAC also highlighted that Punjab and Khyber Pakhtunkhwa have already exempted POL products from IDC, which aligns with federal jurisdiction over oil pricing.
Unless rapid action is taken, Pakistan could face drying up of fuel stations, disruptions in transport and logistics, as well as serious delays in the agricultural sector, which could lead to wider economic consequences, the council added.
