A tax dispute between the oil industry and the Sindh government has caused several petroleum shipments to remain stalled at Karachi ports, raising the possibility of a nationwide fuel shortage in Pakistan in the near future. The reinstatement of a 100% bank guarantee requirement under the Sindh Infrastructure Development Cess is at the center of the dispute.
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At least five large ships transporting gasoline and diesel for PSO, HPL, PGL, and Parco are pending customs clearance, according to the Oil Companies Advisory Council. The group cautioned that if the cargoes are not cleared right away, recovery could take longer than two weeks and that the oil supply chain is in danger of collapsing.
The issue is with a 1.8% tax that Balochistan and Sindh imposed on petroleum imports. An earlier agreement that permitted businesses to submit undertakings in place of pricey bank guarantees was recently revoked by the Excise Department, leaving the sector beset financially by billions of rupees.
In order to avoid a nationwide fuel crisis, the OCAC has called on the federal government to intervene immediately, requesting a policy solution and the exemption of petroleum products from the levy, similar to what has been done in Punjab and Khyber Pakhtunkhwa.
