- Oil shipments remain stranded at Karachi ports.
- Five large gasoline and diesel vessels are awaiting authorization.
- Sindh reinstates 100% IDC bank guarantee requirement.
Pakistan faces the risk of a nationwide fuel shortage as several oil cargoes remain stuck at ports following the Sindh government’s decision to reinstate a 100% bank guarantee requirement under the Sindh Infrastructure Development Cessation (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. The news reported on 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 consignments, including vessels carrying petrol and diesel for PSO, HPL, PGL and Parco, are currently awaiting customs clearance at Karachi ports.
With Motor Spirit (gasoline) stocks rapidly depleting in Keamari, the industry has warned of serious disruption across the country, especially during the current agricultural season, if immediate action is not taken.
“The oil supply chain is on the brink of collapse. Recovery could take more than two weeks if shipments are not cleared now,” the OCAC added. The dispute centered on the 1.8% IDC imposed 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 While the Supreme Court is still hearing the case, the Sindh Excise Department has abruptly withdrawn a provisional agreement, which previously allowed commitments in lieu of bank guarantees, and is now demanding billions of rupees in guarantees per vessel, a financial burden that the industry says it simply 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 is urging the Federal Board of Revenue (FBR) and Pakistan Customs to immediately clear all oil cargoes without bank guarantees, and is calling for a policy-level resolution, including i) formal recognition that oil pricing is a federal subject; ii) inclusion of IDC in fuel pricing mechanisms and iii) a framework to recover past IDC dues.
The OCAC also noted that Punjab and Khyber Pakhtunkhwa have already exempted POL products from the IDC, aligning with federal jurisdiction over oil pricing.
Unless swift action is taken, Pakistan could face droughts at fuel stations, disruptions in transport and logistics and severe delays in the agricultural sector, which could trigger wider economic consequences, the council added.
