- Oil cargoes remain stranded at Karachi ports.
- Five large petrol and diesel vessels await clearance.
- Sindh restores 100% IDC bank guarantee claim.
Pakistan faces the risk of a nationwide fuel shortage as several oil cargoes are still 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, The news reported Tuesday.
The Oil Companies Advisory Council (OCAC), in its letter written on Monday to the Chief Minister of Sindh 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.
With Motor Spirit (petrol) stocks in Keamari rapidly depleting, the industry has warned of serious nationwide disruptions, especially in the ongoing farming season, if immediate action is not taken.
“The oil supply chain is on the verge of collapse. Recovery could take over two weeks if the cargo is not cleared now,” OCAC added. The dispute centered on the 1.8% IDC levied by the governments of Sindh and Balochistan on POL imports. While the Supreme Court is still hearing the case, the Sindh Excise Department has abruptly withdrawn a temporary arrangement that previously allowed companies in lieu of bank guarantees, and is now demanding billions of rupees in guarantees per vessel, a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 pricing, tight credit lines and razor-thin margins, OCAC estimates that IDC adds more than Rs 3 per liter to fuel costs, a burden that cannot be passed on to consumers under the current pricing mechanisms.
The Council urges the Federal Board of Revenue (FBR) and Pakistan Customs to immediately clear all oil cargoes without bank guarantees, and calls for a decision at the political level, including i) formal recognition that oil prices are a federal matter; ii) inclusion of IDC in fuel price mechanisms and iii) a framework for recovery of past IDC charges.
OCAC also pointed out that Punjab and Khyber Pakhtunkhwa have already exempted POL products from the IDC, in line with federal jurisdiction over oil prices.
Unless swift action is taken, Pakistan could face drying up of petrol stations, disrupted transport and logistics and severe delays in the agricultural sector, potentially triggering wider economic consequences, the council added.
