Fuel Smuggling Crisis: Senate Warns of Major Blow to Legal Sales and Tax Revenue

ISLAMABAD: The Senate was informed on Tuesday that petroleum smuggling in Pakistan, specifically high-speed diesel from neighboring countries, has significantly impacted the legal sale of petroleum products and caused substantial revenue losses to the national exchequer.

In a written reply to questions asked by senators, the Minister for Energy (Petroleum Division), Ali Pervaiz Malik, said that the matter was taken up with the Federal Board of Revenue (FBR) and the Ministry of Interior. Recent actions taken by the FBR and the Ministry of Interior have significantly reduced smuggling. Digitization of the oil supply chain has been initiated and is being steered by the FBR and OGRA through the oil industry in a phased manner.

The House was informed that the budgeted collection target from the petroleum levy for the fiscal year 2025 was PKR 1,281 billion, and 58 percent—i.e., PKR 743.83 billion—was collected up to February 28, 2025.

The House was also informed that over the last five years, a substantial decline in indigenous gas supply has been noticed—i.e., from 2,378 MMCFD in fiscal year 2018-19 to 1,714 MMCFD in fiscal year 2023-24. The natural gas supply to SSGC alone has reduced by 40 percent since 2017-18.

Efforts to curb petroleum smuggling in Pakistan are now being reinforced through technology and cross-department collaboration to ensure greater transparency and revenue protection.