The Oil Companies Advisory Council (OCAC) has sounded the alarm over the resurgence of illegal fuel trade, warning the Federal Board of Revenue (FBR) of a staggering revenue loss of approximately Rs1.5 billion per day due to smuggling and adulteration.
In a letter addressed to Abdul Basit Abbasi, Director Customs Intelligence at FBR, OCAC acknowledged the success of enforcement actions taken between September and December 2024, which led to a significant increase in legal fuel sales and tax revenues. However, the council now warns that illicit fuel activities have returned aggressively, undoing the progress made late last year.
According to OCAC, smuggled High-Speed Diesel (HSD) is currently being sold at Rs180 per litre, far below the official market price of Rs258.64. Similarly, adulterated Motor Spirit (MS), mixed with light aliphatic hydrocarbons and solvents, is available at Rs160 per litre, well below the regulated rate of Rs255.63.
“This resurgence of illegal fuel trade not only disrupts legitimate businesses but also results in substantial losses for the national exchequer,” the OCAC stated, highlighting that declining fuel sales reflect the adverse impact. Official figures show that HSD sales in February 2025 fell by 6% year-on-year, while preliminary data indicates that MS sales in March 2025 could decline by 5% compared to the same period last year. The drop is even steeper when compared to projected sales based on positive trends seen in late 2024, with MS down 13% and HSD down 16%, despite increased fuel demand from the agricultural sector.
To counter the rising smuggling and adulteration, the OCAC has urged the FBR to take immediate and decisive action, recommending, shutting down illegal fuel retail sites and ensuring strict enforcement to prevent their re-emergence, strengthening border controls to curb smuggling, which could help recover 4,000 to 8,000 metric tons of illicit fuel daily., and restricting the import of white spirit, a chemical widely used to adulterate diesel, to protect fuel quality and government revenues.
The OCAC has reaffirmed its willingness to collaborate with authorities in tackling the issue. “Your past enforcement efforts were instrumental in curbing illegal fuel trade. We trust in your continued vigilance and remain available for any support required,” the council stated in its letter.
The letter was also forwarded to the Secretary Petroleum, Chairman FBR, Chairman OGRA, Member Customs, and senior enforcement officials in Karachi and Quetta for coordinated action.
