By Staff Reporter
ISLAMABAD: Pakistan will roll out real-time digital tracking of every litre of petroleum products within a month, a landmark reform to stem smuggling, theft, misappropriation, and adulteration that cost the economy up to Rs500 billion annually, Dawn newspaper reported on Friday.
The National Assembly passed the Petroleum (Amendment) Act 2025 on Wednesday, overhauling the nearly century-old Petroleum Act 1934 to introduce cutting-edge digital monitoring systems for the production, import, storage, transport, and sale of petroleum products, including liquefied petroleum gas (LPG). The legislation empowers authorities to clamp down on illicit trade that has long undermined the economy and local industry.
“The new system will ensure continuous monitoring to regulate the petroleum supply chain,” a senior government official told Dawn newspaper, speaking on condition of anonymity due to the sensitivity of the issue. The official said the law aims to streamline coordination among enforcement agencies, enabling them to regulate storage, transportation, and sales both jointly and independently.
The reform grants deputy commissioners, assistant commissioners, and designated officers under the Customs Act 1969 sweeping powers to seize smuggled or illegally stored fuel, along with related infrastructure, with confiscation proceedings permitted before or after conviction.
The Oil and Gas Regulatory Authority (Ogra), working closely with refineries, oil marketing companies, and other stakeholders, has spent months fine-tuning the technical framework for the digital tracking system, which will monitor petrol stations, transportation routes, and designated storage facilities.
Pakistan’s petroleum sector has long been plagued by smuggling, particularly from Iran, which has inflicted severe losses on local refineries and oil marketing companies while depriving the government of critical revenue. A 2020 inquiry commissioned by then-Prime Minister Imran Khan laid bare the scale of the problem, estimating annual oil smuggling from Iran at over Rs250 billion and highlighting a glaring lack of oversight.
A more detailed intelligence report submitted in April 2024 painted an even grimmer picture, revealing that around 10 million litres of Iranian petrol and diesel were smuggled into Pakistan daily, resulting in revenue losses exceeding Rs227 billion. The 2024 report exposed systemic failures, identifying 533 illegal petrol stations, 105 known oil smugglers, and complicity among personnel in over a dozen law enforcement agencies. It detailed a network of informal border crossings and established smuggling routes crisscrossing the country, underscoring the urgent need for reform.
The amended law introduces severe penalties to deter violations. Individuals involved in illegal import, transport, storage, sale, refining, or blending of petroleum products face fines of Rs1 million, with repeat offenders liable for Rs5 million. Facilities operating without valid licences will be shuttered, with machinery, storage tanks, and petroleum products confiscated, and owners fined Rs10 million. Premises found storing or selling smuggled fuel face immediate closure, asset seizure, and a Rs100 million fine, with the Department of Explosives mandated to cancel their licences.
Facilities with expired or cancelled storage licences, issued under Form K by the Department of Explosives, have a six-month grace period to renew or restore their status. Non-compliance will lead to sealing, asset confiscation, and a Rs1 million fine. The Department of Explosives must process renewals within 30 days of receiving complete documentation and payment.
Vehicles used in smuggling will be seized under the Customs Act 1969, with goods handed to customs officers for further action. Confiscation can proceed without a conviction, enabling swift enforcement. Trials will be conducted in the Sessions Court, with deputy and assistant commissioners exercising administrative powers. Aggrieved parties may appeal to the High Court within 30 days.
The reform addresses long-standing demands from refineries and oil marketing companies for tougher controls, particularly at porous borders and key domestic choke points. Beyond curbing revenue losses, the digital tracking system aims to reduce environmental damage and engine wear caused by adulterated fuel, a widespread issue that has eroded public trust in the petroleum supply chain.
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