OGRA Responds to Petrol and Diesel Shortage Rumors

The Oil and Gas Regulatory Authority (OGRA) has dismissed recent reports of a potential fuel shortage in Pakistan, assuring the public that the supply of petroleum products remains stable across the country. In an official statement released on Tuesday, an OGRA spokesperson acknowledged a brief delay in the clearance of imported fuel consignments earlier this week but reassured that the situation has now returned to normal.

The spokesperson also confirmed that two vessels carrying petrol and diesel from separate suppliers were cleared today, further stabilizing the national fuel supply.

This clarification comes amid mounting industry concerns, sparked by the Sindh government’s reinstatement of a 100% bank guarantee requirement under the Sindh Infrastructure Development Cess (IDC). This policy has caused several petroleum shipments to become stranded at Karachi ports, leading to fears of a nationwide shortage.

Industry Concerns About IDC Policy

The Oil Companies Advisory Council (OCAC) raised alarms that the new IDC policy could severely disrupt the country’s fuel supply chain if not resolved quickly. In a letter to the Sindh Chief Minister and federal authorities, the OCAC warned that at least five major petroleum shipments—destined for Pakistan State Oil (PSO), Hascol Petroleum Limited (HPL), Pak-Arab Refinery Company (PARCO), and Pakistan Gas & Oil Limited (PGL)—are still awaiting customs clearance. With petrol stocks at the Keamari terminal running low, the OCAC emphasized that fuel shortages could worsen, particularly during the ongoing agricultural season.

The OCAC further stressed that the oil supply chain is “on the brink of collapse,” warning that recovery could take more than two weeks if the shipments are not cleared immediately.

Dispute Over Bank Guarantees and IDC Levies

The crux of the dispute centers on the 1.8% IDC imposed by the Sindh and Balochistan provincial governments on petroleum imports. Although the Supreme Court is still hearing the case, the Sindh Excise Department has withdrawn an interim arrangement that had previously allowed undertakings in place of bank guarantees. The department is now demanding billions of rupees in guarantees per vessel, a financial burden the petroleum industry claims it cannot bear.

With strict regulations on fuel pricing, limited credit lines, and thin profit margins, the OCAC estimates that the IDC adds over Rs. 3 per liter to the cost of fuel. The industry argues that this added expense cannot be passed on to consumers due to current pricing rules, further straining the supply chain.

Call for Policy Resolution

The OCAC is urging the Federal Board of Revenue (FBR) and Pakistan Customs to clear all petroleum cargoes without the bank guarantees and has called for a long-term policy resolution. Among its recommendations, the council has proposed the formal recognition of petroleum pricing as a federal matter, the inclusion of IDC charges in fuel pricing mechanisms, and a framework for recovering past IDC dues.

In light of the dispute, both Punjab and Khyber Pakhtunkhwa provinces have exempted petroleum products from the IDC, aligning with federal jurisdiction.