Government will introduce a real-time digital tracking system for petroleum products within a month to curb smuggling, theft, and adulteration in the sector. Backed by the Petroleum (Amendment) Act 2025, the initiative is designed to track each litre of fuel from import and production to storage, transportation, and sale. Officials estimate that the reform could address annual revenue losses ranging between Rs. 300 billion and Rs. 500 billion. The National Assembly passed the amendment on Wednesday, authorising the deployment of IT-based monitoring tools across the petroleum supply chain and enhancing coordination between enforcement bodies to regulate storage, transportation, and sales.
The updated law replaces provisions from the Petroleum Act 1934 with modern enforcement measures. Deputy commissioners, assistant commissioners, and officers empowered under the Customs Act 1969 can now seize smuggled or illegally stored fuel, as well as related infrastructure, even before a conviction is secured. Ogra, working alongside market stakeholders, is finalising the technical framework to ensure a smooth nationwide rollout. The tracking system will cover petrol stations, fuel transport routes, and designated storage sites, delivering comprehensive visibility over petroleum distribution. This move comes in response to persistent smuggling activities, which have hurt both legitimate industry players and government revenues.
Industry data and government inquiries underscore the scale of the problem. A 2020 investigation ordered by then-prime minister Imran Khan revealed smuggling worth over Rs. 250 billion annually from Iran, with limited regulatory oversight. More recent intelligence from April 2024 estimated that 10 million litres of Iranian petrol and diesel enter Pakistan illegally each day, causing revenue losses exceeding Rs. 227 billion. The same report documented 533 illegal petrol stations, identified 105 known oil smugglers, and highlighted the involvement of personnel from more than a dozen enforcement agencies. It also detailed the existence of informal border crossings and established smuggling routes that bypass legal checkpoints.
The Petroleum (Amendment) Act 2025 introduces strict penalties to deter such practices. Individuals engaged in illegal import, transport, storage, sale, refining, or blending of petroleum products face fines of Rs. 1 million, increasing to Rs. 5 million for repeat violations. Facilities operating without valid licences will be shut down, with machinery, storage tanks, and fuel confiscated, while owners face fines of Rs. 10 million. For expired or cancelled licences, a six-month grace period has been granted for renewal, after which facilities will be sealed and fined. The Department of Explosives is mandated to process renewals within 30 days of receiving complete documentation and payment. Premises found selling or storing smuggled fuel will be closed immediately, assets confiscated, and owners fined Rs. 100 million, with their licences revoked. Vehicles used for smuggling will be seized under the Customs Act 1969, and trial jurisdiction will rest with the Sessions Court. Appeals against administrative decisions can be filed with the High Court within 30 days.
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