The provincial government releases a shipment of oil and demands bank guarantees instead of committing to companies to ship the shipments.
CM Sindh Murad Ali Shah. Photo: Government of Sindh
The oil crisis in the country may deepen as the industry faces possible collapse due to claims of Rs 180 billion due to the Sindh Infrastructure Development Cess imposed by the Sindh government on the import of petroleum products.
The Sindh government on Tuesday released a cargo of oil from Pakistan State Oil (PSO), stuck in the port due to the SIDC issue. Now, the provincial government is seeking assurances from PSO and other oil marketing companies (OMCs) of payment of infrastructure fees for the release of more 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 cessation 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 quashed the stay order and ordered the industry to pay the fee. The oil companies then filed an appeal to the Supreme Court, but the top court also ordered the industry to pay the fee.
At that time, the then Petroleum Minister asked the oil industry to commit to the Sindh government to pay once the case was finally resolved in court. However, since 2023 the execution of the court’s decision was pending. The Sindh government has directed the OMCs to pay the fee retrospectively, starting from 2021.
Read more: Fuel shortage temporarily eased as Sindh clears PSO vessel
The Sindh government has claimed that the oil industry owes approximately Rs 180 billion because of the tax. However, oil industry officials argue that the tax was never included in the oil pricing mechanism and therefore they cannot pay the tax.
The industry has approached 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.
Deputy Director (HQ), Directorate General (Taxation and Excise Wing), Sindh, wrote a letter to the Petroleum Minister on October 17, seeking implementation of the Supreme Court decision directing OMCs to pay the tax.
“It is reported that in accordance with the orders of the Supreme Court of Pakistan dated 1 September 2021 and the decision of the provincial cabinet dated 6 October 2025, the Excise, Taxation and Narcotics Control Department, Government of Sindh, requests Pakistan State Oil and all other petroleum product importing companies to submit bank guarantees in lieu of undertakings for the release of their shipments,” the Sindh Excise Department said.
The department sought that 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 the required documents were submitted, their cases would be processed on top priority by the Sindh government.
Sindh clarified that any delay in submitting bank guarantees, resulting in disruption or shortage of fuel supply, would be the sole responsibility of PSO and other OMCs. The Sindh cabinet also held a meeting on October 6, 2025 on infrastructure development cess tax on imports of petroleum products.
After detailed 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 Minister of Justice and the Advocate General of Sindh. The cabinet further ordered the administrative department to ensure issuance of such references without further delay.
