ISLAMABAD: President Asif Ali Zardari has signed the Petroleum (Amendment) Bill, 2025, into law, empowering authorities to crack down on petroleum smuggling, illegal filling stations, and tax evasion while introducing IT-based tracking across the fuel supply chain.
The new legislation, passed by Parliament earlier this month, strengthens enforcement powers for Deputy Commissioners, Assistant Commissioners, and Customs authorities, allowing them to seal illegal pumps, confiscate smuggled petroleum, and seize vehicles used in illicit trade. It also significantly increases fines and penalties, with repeat offenders facing asset confiscation and potential criminal prosecution.
Petroleum smuggling has long plagued Pakistan’s energy sector, particularly in Balochistan and Sindh, where fuel is trafficked across the Iranian border. Industry sources estimate that smuggled petroleum accounts for up to 20 percent of the local market supply, undercutting licensed retailers, reducing government tax revenue, and exposing consumers to substandard products.
The Oil Companies Advisory Council (OCAC) recently warned of a resurgence in illicit fuel trade, noting that smuggled high-speed diesel (HSD) was being sold for as little as Rs180 per liter, well below the regulated market price of Rs258.64. Similarly, adulterated motor spirit (MS), mixed with solvents and low-grade hydrocarbons, has been reported at Rs160 per liter against the official rate of Rs255.63. OCAC said this illegal trade causes daily revenue losses of around Rs1.5 billion, adding that legal fuel sales had dropped by 6 percent year-on-year in February 2025.
According to sources in the Petroleum Division, six new enforcement clauses have been added under the amendment. These empower authorities to shut down stations selling smuggled fuel, confiscate pumping equipment, and take direct action against tankers carrying illegal consignments. They clarified that enforcement will focus on large-scale operations, particularly oil tankers transporting more than 40,000 liters, rather than small vehicles or motorcycles.
Industry sources said that the new law addresses years of regulatory weaknesses that allowed illegal trade to flourish. Raids on unregistered pumps often stalled due to overlaps between district administrations, customs, and regulators, allowing violators to escape or resume operations under new names. The new framework centralizes powers at the district level, giving Deputy Commissioners and Customs officers clear authority to act.
A major innovation in the bill is the nationwide rollout of IT-based fuel tracking, which the Petroleum Ministry has been piloting in select districts. The digital system will trace petroleum shipments from refineries and import terminals to licensed retail outlets, making it harder for smuggled fuel to enter the legal supply chain. Officials say the system will be integrated with customs checkpoints and refinery records to ensure transparency.
The law comes at a critical time for the government, which is under pressure to increase non-tax revenues and cut fiscal deficits. Petroleum taxes remain a key contributor to the federal budget, with the petroleum levy alone projected at over Rs1.3 trillion for fiscal year 2025–26. Smuggling and tax evasion have historically eroded this revenue stream, leaving gaps that forced successive governments to raise prices for legitimate consumers.
Sources in the Petroleum Division also said the IT-based tracking rollout will begin in major urban centers before extending to border and rural areas. The government has also pledged to ensure coordination between customs and district administrations to sustain the anti-smuggling drive.
The Petroleum (Amendment) Bill, 2025, represents one of the most significant regulatory overhauls in Pakistan’s energy sector in recent years. By combining enhanced enforcement powers, digital monitoring, and stiffer penalties, policymakers aim to reduce smuggling, strengthen transparency, and protect state revenues. Its success, however, will depend on implementation, political will, and the ability to withstand resistance from entrenched smuggling networks.
