Petroleum Division revises bonded-storage policy to boost fuel supply resilience

ISLAMABAD: The Petroleum Division has finalised substantially revised policy guidelines for importing petroleum products through customs-bonded storage facilities, seeking to remove regulatory hurdles and create a more workable framework for strengthening Pakistan’s fuel supply chain.
The revised draft of the “Policy Guidelines on Import on Foreign Supplier’s Account through Customs Bonded Storage Facilities” has been submitted to the Economic Coordination Committee (ECC) of the Cabinet for consideration and approval.
The Petroleum Division said the proposed changes were necessary to operationalise the bonded-storage framework and enhance the country’s ability to withstand disruptions in petroleum supplies, particularly amid the evolving geopolitical situation and risks associated with the Strait of Hormuz.
The original policy was approved by the ECC on June 26, 2023, but no foreign supplier has so far established a bonded storage facility under the framework. Subsequent consultations with stakeholders exposed a number of legal, regulatory and procedural issues that prevented the policy from becoming operational.
The revised guidelines have been prepared after detailed deliberations with relevant stakeholders, including the Federal Board of Revenue (FBR), which had raised reservations about several provisions in light of the Customs Act, 1969, and the Sales Tax Act, 1990.
The Petroleum Division has proposed amendments to the relevant laws and regulatory and procedural frameworks to facilitate the establishment of bonded petroleum storage facilities in the country.
The revision also takes into account concerns raised by international oil traders. In 2024, Vitol and some other traders had sought clarification over provisions requiring foreign suppliers to pay duties, taxes and customs-clearance charges on behalf of local purchasers.
The traders had argued that the arrangement would impose additional financial and compliance burdens on foreign suppliers, create reimbursement complications and undermine the policy’s objective of attracting international investment. They proposed that local purchasers should instead be responsible for import clearance, ex-bonding and payment of applicable duties and taxes.
Under the proposed approach, petroleum products would be released from bonded storage only after the local purchaser had completed the required customs clearance and paid the applicable duties and taxes.
The Petroleum Division said development of bonded storage facilities had become increasingly important in view of the prevailing geopolitical situation and the need to improve the resilience of Pakistan’s petroleum supply chain.
The final draft of the revised policy guidelines has been placed before the ECC along with a comparison of the existing and proposed frameworks for consideration and approval.