Pakistan is facing a potential intensification of its fuel crisis as a dispute over Rs180 billion in Sindh Infrastructure Development Cess (SIDC) claims has created fears of a possible collapse in the petroleum sector.
On Tuesday, the Sindh government released a Pakistan State Oil (PSO) tanker that had been held at the port due to the ongoing cess dispute. However, the provincial authorities have now demanded payment guarantees from PSO and other oil marketing companies (OMCs) before clearing additional shipments.
The conflict dates back to 2021, when the Sindh government imposed the Infrastructure Development Cess on petroleum product imports. The oil industry challenged the levy in the Sindh High Court, which initially granted a stay order. Later, a two-member bench lifted the stay and ordered the industry to pay the cess. The companies then appealed to the Supreme Court, which also upheld the order for payment.
At that time, the then-Federal Petroleum Minister advised oil companies to provide written assurances to the Sindh government, pledging that payments would be made once the case reached its final conclusion.
Since 2023, however, implementation of the court’s decision had been on hold. The Sindh government has now directed oil marketing companies to settle dues dating back to 2021, claiming that Rs180 billion remain outstanding. The industry, on the other hand, maintains that the SIDC was never included in the official fuel pricing structure, making payment financially unviable.
The oil sector has appealed to the Ministry of Petroleum for intervention, warning that if forced to pay the full amount claimed by the Sindh government, the entire oil industry could collapse.
On October 17, the Deputy Director (Headquarters) of the Directorate General of Excise and Taxation, Sindh, sent a letter to the Federal Minister for Petroleum, urging enforcement of the Supreme Court’s September 1, 2021 judgment and the Sindh Cabinet’s October 6, 2025 decision.
The letter stated that, in accordance with the court’s and cabinet’s directives, the Sindh Excise, Taxation and Narcotics Control Department is requesting PSO and other importers to submit bank guarantees for the clearance of petroleum cargoes. The Sindh government further clarified that any delay in submitting the guarantees will make PSO and other oil companies solely responsible for any resulting fuel shortages or supply disruptions.
During its meeting on October 6, 2025, the Sindh Cabinet discussed the implementation of the Infrastructure Development Cess on petroleum imports and decided that the concerned department should immediately coordinate with the federal government, the petroleum ministry, and PSO to ensure compliance with the Supreme Court’s orders. It also directed all oil companies to submit their bank guarantees within 15 days.
