KARACHI: Pakistan’s oil industry has warned that it may be forced to suspend petroleum imports, threatening disruptions to the country’s fuel supply chain if the Sindh government’s requirement for bank guarantees (BGs) is not urgently resolved.

In a letter to the secretary of the Petroleum Division, the Oil Companies Advisory Council (OCAC) said the Sindh Excise, Taxation and Narcotics Control Department had directed oil companies to submit BGs before the release of petroleum consignments. The department has also placed responsibility for any fuel shortages resulting from non-compliance squarely on the industry.

Calling the matter a “long-standing issue recurring without resolution,” the OCAC said the requirement stems from the Sindh Infrastructure Development Cess (SIDC), which remains sub judice before the Supreme Court of Pakistan. The court, through an interim order on September 1, 2021, had directed that BGs be furnished against all imports into Sindh to enable their clearance.

However, the OCAC argued that the order was general in nature and did not consider the massive scale of petroleum imports, which typically range between Rs15 billion and Rs25 billion per shipment. With around 20–25 consignments imported each month, the total value of the required guarantees is so high that no company in the sector has the financial capacity to provide them, it said.

The council noted that the requirement was “financially unsustainable” due to limited credit lines and the sector’s heavily regulated structure with razor-thin profit margins.

It urged the federal government to intervene and persuade the Sindh and Balochistan governments to exempt petroleum products from the infrastructure development cess (IDC), as already done by the Punjab Revenue Authority. If a consensus could not be reached, the OCAC proposed incorporating the IDC into fuel pricing and establishing a mechanism to account for past dues.

The OCAC cautioned that without immediate resolution, oil cargoes could face clearance delays, potentially leading to a complete halt in imports. “Any subsequent supply chain impact cannot be attributed to the industry, which has been urging the authorities to resolve this issue for many years,” it said, warning that uninterrupted fuel supplies and the financial sustainability of the downstream sector were now at risk.