The government has moved forward with a significant step to combat smuggling and adulteration of petroleum products, which causes substantial revenue losses and environmental damage, with the introduction of the Petroleum (Amendment) Act, 2025. Presented in the National Assembly by Petroleum Minister Ali Pervaiz Malik, the bill seeks to amend the 1934 Petroleum Act to introduce real-time tracking of petroleum products from import and production to retail sale. This move aims to reduce the massive revenue losses estimated at Rs300-500 billion annually due to smuggling and adulteration of petroleum products.
The draft law proposes the implementation of information technology-based tracking systems to monitor petroleum products, including LPG, and tackle illegal practices such as the illegal transportation and sale of petrol, particularly from smuggled sources. Local refineries and oil marketing companies have been urging the government for years to enforce stricter measures to control smuggling, which harms their businesses and results in significant losses to the government.
Reports indicate that a large volume of petroleum products, primarily from Iran, is being smuggled into Pakistan, with an inquiry by the previous government revealing a Rs250 billion loss annually. A 2024 intelligence report revealed that 10 million liters of Iranian petrol and diesel were being smuggled into Pakistan daily, leading to a revenue loss of over Rs227 billion. The bill addresses these concerns by introducing a framework for stricter enforcement, including confiscation of illegal petroleum products and machinery.
The new law also empowers authorities to take swift action against violators, with powers to seize petroleum products, transport vehicles, and storage facilities involved in illegal activities. Offenders could face heavy fines, ranging from Rs1 million for initial violations to Rs10 million for repeat offenders. The bill stipulates that illegal facilities will be sealed, and their machinery and stock confiscated. Additionally, facilities operating without a valid license will face closure, and owners could be fined up to Rs10 million.
To facilitate the implementation of these regulations, the bill introduces a digital framework to track petroleum products at every stage of the supply chain. This includes monitoring storage points, petrol stations, and transport vehicles using coordinated IT systems. The bill also mandates the closure of facilities dealing with smuggled petroleum products, with fines as high as Rs100 million and the confiscation of all involved machinery, equipment, and products.
With the introduction of the new law, the government is taking steps to curb illegal fuel practices and protect the nation’s economy from the widespread issue of petroleum smuggling.
