The provincial government releases an oil cargo, demands bank guarantees instead of commitments from companies to remove cargoes
CM Sindh Murad Ali Shah. Photo: Sindh Government
The oil crisis in the country may deepen as the industry faces a possible collapse due to the demands 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 an oil cargo of Pakistan State Oil (PSO) stuck in the port due to the SIDC issue. Now the provincial government is seeking guarantees from PSO and other oil marketing companies (OMCs) for infrastructure cess payment for release of additional oil cargoes.
The Sindh government and the oil industry have been locked in a dispute over the introduction of SIDC since 2021. According to oil industry officials, the Sindh government had imposed the infrastructure development cess on the import of petroleum products in 2021. However, the oil industry got a stay order from the Sindh High Court.
They said a two-member bench of the Sindh High Court later vacated the stay order and directed the industry to pay the cess. The oil companies then appealed to the Supreme Court, but the Supreme Court also ordered the industry to pay the cess.
At that time, the then oil minister asked the oil industry to give a promise to the Sindh government that they would pay once the case was finally decided in court. Since 2023, however, the implementation of the court’s decision has been pending. The Sindh government has now directed OMCs to pay the cess retrospectively, from 2021.
Read more: Fuel shortage eases temporarily as Sindh clears PSO vessel
The Sindh government has claimed that the oil industry owes approximately Rs 180 billion. due to the cess. However, oil industry officials claim that the cess was never included in the oil pricing mechanism and hence they are unable to pay the tax.
The industry has approached the Petroleum Division requesting its intervention to resolve the issue.
“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 General (HQ), Directorate General (Excise & Taxation Wing), Sindh, wrote a letter to the Petroleum Minister on October 17, calling for the implementation of the Supreme Court decision directing OMCs to pay the cess.
“It is informed that as per the orders of the Supreme Court of Pakistan dated 01.09.2021 and the decision of the Provincial Cabinet dated 06.10.2025, the Excise, Taxation and Narcotics Control Department, Government of Sindh, requests that Pakistan State Oil and all other oil companies importing guarantee that they will instead import petroleum products from their banking products. shipments,” the Sindh Excise Department stated.
The department sought that the PSO and other OMCs be directed to furnish the requisite bank guarantees to ensure compliance with the Supreme Court orders “in letter and spirit”. It added that after submitting the necessary documents, their cases would be processed on top priority basis by the Sindh government.
Sindh clarified that any delay in submission of bank guarantees resulting in interruption or shortage of fuel supply will be the sole responsibility of PSOs and other OMCs. The Sindh Cabinet also held a meeting on 6 October 2025 on levying infrastructure development charges 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 the PSO to ensure immediate compliance with the Supreme Court orders and direct the 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 the Advocate General of Sindh. The Cabinet further instructed the administrative department to ensure the issuance of the mentioned references without further delay.
