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Pakistan’s fuel prices are expected to increase by around Rs3 per litre following the Sindh government’s decision to reimpose a 1.8% Sindh Infrastructure Development Cess (SIDC) on petroleum imports. The move, according to industry leaders, threatens to disrupt nationwide fuel supplies as major importers face clearance delays at Karachi ports.
The SIDC, previously suspended, has been reinstated by the Sindh Excise and Taxation Department, reviving the controversial requirement for 100% bank guarantees at customs clearance. The measure aims to boost provincial revenue but has drawn sharp criticism from oil companies already struggling with tight credit lines and government-controlled margins.
Industry Concerns
The Oil Companies Advisory Council (OCAC), representing major importers including PSO, Hascol Petroleum, and Pakistan GasPort Limited (PGL), warned that the levy would directly increase the landed cost of petrol and high-speed diesel (HSD).
“This cess adds over Rs3 per litre to the product cost and will ultimately burden the general public,” said OCAC Secretary General Syed Nazir Abbas Zaidi in a letter to the Sindh Chief Minister.
Several fuel cargoes are already facing clearance delays at Karachi port, raising fears of nationwide shortages, particularly during the high-demand agricultural season.
Federal & Industry Response
The OCAC urged the Sindh government to suspend the cess or allow cargo clearance without bank guarantees to prevent disruptions. It also requested the Ministry of Energy and FBR to intervene, emphasizing that petroleum pricing is a federal subject, and other provinces like Punjab and Khyber Pakhtunkhwa have already exempted petroleum products from similar taxes.
“If the issue is not resolved, the supply chain could face a nationwide disruption that may take weeks to recover,” warned a senior energy sector official.
The council suggested that if the levy remains in force, it should be incorporated into the federal pricing formula to ensure regulated recovery rather than leaving oil firms to absorb the cost.
With several vessels already awaiting clearance and more shipments en route, the situation could escalate into a full-scale supply bottleneck if immediate policy action is not taken. The decision now rests with the provincial and federal authorities to balance revenue objectives against fuel security and inflation control.
