Provincial government releases oil cargo, demands bank guarantees instead of engaging with companies to clear cargoes
CM Sindh Murad Ali Shah. Photo: Government of Sindh
The oil crisis in the country may worsen as the industry faces collapse due to claims of Rs180 billion under the Sindh Infrastructure Development Levy imposed by the Sindh government on the import of petroleum products.
The Sindh government on Tuesday released an oil consignment of Pakistan State Oil (PSO), stuck at the port due to the SIDC issue. Now, the provincial government is seeking guarantees from PSO and other oil marketing companies (OMCs) regarding the payment of infrastructure fees for the release of new oil cargoes.
The Sindh government and the oil industry have been locked in a dispute over the imposition of SIDC since 2021. According to oil industry officials, the Sindh government had imposed a suspension of infrastructure development on imports of petroleum products in 2021. However, the oil industry obtained a stay order from the Sindh High Court.
They said a two-member bench of the Sindh High Court later set aside the stay order and ordered the industry to pay the tax. The oil companies then filed an appeal in the Supreme Court, but the apex court also ordered the industry to pay the tax.
At the time, the then Oil Minister had asked the oil industry to commit to the Sindh government to pay once the matter was finally settled in court. However, as of 2023, the implementation of the court’s decision was pending. The Sindh government has now ordered OMCs to pay the tax retrospectively, from 2021.
Learn more: Fuel shortage temporarily eases as Sindh clears PSO vessel
The Sindh government claimed that the oil industry owed around 180 billion rupees because of the tax. Oil industry officials, however, say the tax was never included in the oil pricing mechanism and hence they are unable to pay the tax.
The industry contacted the Petroleum Division, requesting its intervention to resolve the problem.
“The oil industry will collapse if it is forced to pay Rs 180 billion as claimed by the Sindh government,” industry officials warned.
The Deputy Director (HQ) of Directorate General (Excise and Taxation Wing), Sindh, wrote a letter to the Petroleum Minister on October 17, calling for implementation of the Supreme Court’s decision directing OMCs to pay the tax.
“It is informed that in pursuance of the orders of the Supreme Court of Pakistan dated 01.09.2021 and the decision of the provincial cabinet dated 06.10.2025, the Department of Excise, Taxation and Narcotics Control, Government of Sindh requests that Pakistan State Oil and all other companies importing petroleum products submit bank guarantees in lieu commitments for the release of their shipments,” he said. ” said the Sindh Excise Department.
The ministry requested that the PSO and other OMCs be directed to submit required bank guarantees to ensure compliance with the Supreme Court orders “in letter and spirit”. He added that once they submit the required documents, their files would be treated on priority by the Sindh government.
Sindh clarified that any delay in submission of bank guarantees, resulting in interruption or shortage of fuel supply, would be the sole responsibility of the PSO and other OMCs. The Sindh cabinet also held a meeting on October 6, 2025 regarding levy of infrastructure development tax on imports of petroleum products.
After extensive deliberations, the cabinet decided that the administrative department should immediately inform the federal government, the Ministry of Petroleum and PSO to ensure immediate compliance with the Supreme Court orders and direct PSO and other companies to submit bank guarantees within 15 days.
The draft correspondence was to be prepared in consultation with the law minister and advocate general of Sindh. The cabinet further directed that the administrative department should ensure issuance of the said references without further delay.
