Karachi : The enforcement of the Sindh Infrastructure Development Cess has disrupted the clearance of petroleum shipments at Karachi Port, raising fears of a nationwide fuel shortage. The Oil Companies Advisory Council has urgently appealed to the Sindh chief minister to intervene and resolve the issue.

In a letter sent to the provincial leadership, the council warned that oil tankers MT Islam 2 and MT Hanifa, belonging to Pakistan State Oil, remain berthed at the port awaiting customs clearance. Stocks at the Keamari oil terminal are running low, and delays in clearing these vessels could break the supply chain across the country.

The council also flagged concerns over incoming shipments from Wafi Energy and Pak Arab Refinery, which are expected to arrive on October 21. Without swift clearance, the situation could worsen. The 1.8 percent cess, if applied, may increase fuel prices by more than Rs3 per litre, despite government regulation.

The timing of the disruption is critical. With the agriculture season in full swing, any halt in fuel supply could severely impact farming operations. Even if the issue is resolved quickly, restoring normal distribution may take up to two weeks.

OCAC Chairman Abdul Sami Khan reminded the government that the cess on petroleum, oil and lubricant imports has been a contentious issue since its introduction in 1994. Although the Sindh High Court upheld the levy in 2021, the Supreme Court later suspended that decision, allowing the industry to operate without submitting bank guarantees.

In July 2023, the Sindh Sales Tax and Excise Department reinstated the requirement for local tax declarations before goods could be cleared. Following discussions with the Ministry of Energy and the Oil and Gas Regulatory Authority, an interim solution allowed companies to submit undertakings instead of bank guarantees.

Despite the matter still being under judicial review in both the Supreme Court and the Balochistan High Court, the Sindh government has reimposed the bank guarantee requirement. This move has placed additional financial and operational pressure on the downstream petroleum sector.

The federal energy ministry has repeatedly stated that fuel pricing falls under its jurisdiction. Punjab and Khyber Pakhtunkhwa have already exempted petroleum products from infrastructure cess under their respective laws.

The OCAC estimates that a single 40,000-metric-ton shipment costs around $40 million. Any delay in clearance not only risks supply disruption but also adds significant financial strain to the industry. The council has urged immediate action to prevent a full-blown fuel crisis.