Pakistan’s fuel supply chain is on the brink of disruption after oil marketing companies issued an urgent warning regarding the Sindh government’s newly imposed policy on petroleum imports. The Oil Marketing Association of Pakistan (OMAP) and the Oil Companies Advisory Council (OCAC) have both sounded the alarm, cautioning that the decision to enforce a 1.85% Infrastructure Cess and a mandatory 100% bank guarantee could cripple the flow of petroleum products into the country within days.
The Policy That Sparked the Crisis
The Sindh Excise Department’s decision to reintroduce a 1.85% Infrastructure Cess on imported petroleum products, along with a requirement for oil companies to submit bank guarantees instead of traditional undertakings, has raised immediate concern across the energy industry.
In a formal letter to Federal Minister for Energy (Petroleum Division), Ali Pervaiz Malik, OMAP Chairman Tariq Wazir Ali warned that the policy “threatens to choke Pakistan’s already fragile oil supply chain.”
The association emphasized that this sudden financial burden would lock up billions of rupees in working capital — capital that oil companies rely on for day-to-day import operations, payments, and logistics.
“The new cess regime will make it nearly impossible for OMCs to sustain import operations,” OMAP stated. “If not withdrawn, Pakistan could face serious disruptions in petroleum supplies.”
Financial Strain on Oil Marketing Companies
Oil Marketing Companies (OMCs) are already struggling with delayed tax refunds, foreign exchange losses, and thin regulated profit margins. The added financial pressure of providing bank guarantees on every shipment, combined with the Infrastructure Cess, could push several companies to halt or reduce import operations.
According to industry estimates, the new policy will add approximately Rs2.5 to Rs3 per litre to the overall cost of fuel — an amount that cannot legally be transferred to consumers under Pakistan’s regulated pricing system.
This means companies will be forced to absorb the additional cost, making imports economically unviable. If shipments are delayed or cancelled, dry fuel outlets and transport disruptions could emerge within a week.
Karachi Port Bottleneck — A National Concern
Nearly 70% of Pakistan’s petroleum imports arrive through the Karachi Port, making it the heart of the nation’s energy supply chain. Reports suggest that at least five major shipments, including petrol and diesel cargoes for Pakistan State Oil (PSO), Hascol Petroleum Limited (HPL), and Parco, are currently awaiting customs clearance.
The OCAC confirmed that the Sindh government’s decision to enforce 100% bank guarantees has already stranded several petroleum cargoes at the port. Prolonged delays could result in fuel shortages across Punjab, Sindh, and Khyber Pakhtunkhwa, especially given the country’s limited storage capacity.
Warnings of a Nationwide Fuel Shortage
Industry experts caution that even short-term delays in petroleum imports can have nationwide ripple effects. Fuel shortages could paralyze transportation, agriculture, and logistics — sectors heavily dependent on uninterrupted diesel and petrol supplies.
The timing of the crisis is particularly critical, as Pakistan’s agricultural season is currently underway. Any disruption in fuel delivery could affect crop harvesting, transportation of goods, and power generation, all of which rely on diesel.
OMAP and OCAC have both appealed for immediate federal intervention to prevent what they describe as an “avoidable economic shock.” They have urged the Ministry of Energy and Federal Board of Revenue (FBR) to coordinate with the Sindh government to suspend or modify the new cess policy before it triggers a nationwide crisis.
Broader Economic Impact
Pakistan’s energy sector is already facing immense challenges — from rising global crude oil prices to reduced foreign exchange reserves. The introduction of additional levies and financial constraints on OMCs further complicates an already fragile balance.
Analysts warn that if the policy remains in place:
- Petroleum companies could cut back imports due to cash flow restrictions.
- Fuel shortages may lead to transport strikes and higher logistics costs.
- Inflation could spike further as transport and commodity prices rise.
- Industrial production might slow down, especially in manufacturing and agriculture.
Government’s Role and Expected Action
Sources within the Ministry of Energy confirm that discussions are underway to find a resolution. While Sindh’s provincial authorities argue that the cess is necessary to fund infrastructure development, federal officials are reportedly exploring ways to defer or modify the policy to prevent supply chain disruption.
Energy experts suggest introducing flexible payment guarantees or phased cess implementation to balance government revenue goals with industry viability.
What Happens if the Crisis Escalates
If the situation is not resolved soon, Pakistan could witness fuel rationing similar to past crises. Urban centers like Karachi, Lahore, Islamabad, and Rawalpindi — where demand is highest — would face long queues at petrol pumps, leading to economic slowdowns and public unrest.
Public transport and logistics operators could also raise fares, making travel and daily commuting costlier for citizens.
Implications for Transportation and Logistics
In major cities such as Islamabad and Rawalpindi, transportation companies and private travelers alike rely on consistent fuel supplies. In times of shortages, dependable transport providers become crucial for business continuity and intercity travel.
Companies like Al Farooq Rent A Car provide a reliable alternative for individuals and organizations needing uninterrupted travel during such disruptions. Their services — including rent a car in Islamabad, rent a car in Rawalpindi, and city-to-city car rental — ensure mobility even when fuel availability tightens.
The Road Ahead
The energy sector’s warnings serve as a reminder of Pakistan’s systemic dependence on imported fuels and the fragility of its supply networks. With limited refining capacity and recurring foreign exchange pressures, any policy misstep can quickly escalate into a national emergency.
Experts urge the government to adopt a balanced approach — safeguarding provincial revenue interests without endangering national energy security. The coming week will be critical in determining whether corrective action is taken to avert another fuel shortage crisis.
Related FAQs
Why are oil companies warning of a fuel shortage in Pakistan?
Because the Sindh government has introduced a 1.85% Infrastructure Cess and 100% bank guarantee requirements that make petroleum imports financially unfeasible.
Which companies are affected?
Major importers including PSO, HPL, and Parco have reported delayed shipments due to the new policy.
How much extra cost does the cess add to fuel prices?
It increases import costs by roughly Rs2.5–Rs3 per litre, which cannot be passed on to consumers under current pricing regulations.
Which cities will be affected first if imports are delayed?
Karachi, Lahore, Islamabad, and Rawalpindi — as they consume the largest share of fuel supplies in Pakistan.
What actions are being taken to prevent the crisis?
OMAP and OCAC have urged the Federal Energy Ministry and FBR to negotiate with the Sindh government to suspend or modify the policy immediately.