Sindh Fuel Cess to Raise Prices Rs3/Litre, Risks Shortages

ISLAMABAD: Retail fuel prices in Pakistan are poised to surge by approximately Rs3 per litre following the Sindh government’s reimposition of the 1.8% Sindh Infrastructure Development Cess (SIDC) on petroleum imports, a move oil companies warn could disrupt supplies and burden consumers.

The Oil Companies Advisory Council (OCAC) stated that the levy, enforced by the Sindh Excise and Taxation Department, will immediately inflate the landed cost of petrol and high-speed diesel (HSD), straining importers’ financial capacity. The SIDC also reinstates the contentious requirement for 100% bank guarantees at customs clearance, deemed “unsustainable” due to limited credit lines and regulated margins.

“This cess adds over Rs3 per litre to product costs, ultimately impacting the public, as petroleum prices are federally regulated,” said OCAC Secretary General Syed Nazir Abbas Zaidi in a letter to the Sindh Chief Minister.

The OCAC reported that petrol and diesel cargoes at Karachi’s ports, including those of Pakistan State Oil (PSO), Hascol Petroleum, and Pakistan GasPort Limited (PGL), face clearance delays due to the guarantee mandate. The council cautioned that such delays risk nationwide fuel shortages, particularly during the peak agricultural season.

The OCAC urged the Sindh government to suspend the cess and allow customs clearance without bank guarantees to ensure uninterrupted fuel supply. It also appealed to the Ministry of Energy (Petroleum Division) and Federal Board of Revenue (FBR) for federal intervention, noting that petroleum pricing is a federal prerogative and that Punjab and Khyber Pakhtunkhwa have already exempted petroleum from similar levies.

Industry sources estimated the 1.8% SIDC will raise consumer prices by Rs2.5–Rs3 per litre and spark inflationary pressures across logistics and industrial sectors due to elevated fuel costs. “Unresolved, this could trigger a nationwide supply chain crisis requiring weeks to recover,” a senior energy sector official warned.

The OCAC further proposed that, if retained, the levy be integrated into the federal pricing formula for recovery through regulated adjustments, sparing companies from absorbing costs.

With multiple cargoes stalled at Karachi’s terminals and additional vessels en route, the industry fears an escalating supply bottleneck without immediate policy reversal.