illicit POL products trade resurfaces

ISLAMABAD: The local oil industry has approached Director General Customs Intelligence to curb smuggling of POL products, closure of illegal retail sites and other factors which are detrimental to the industry.
The letter, copy of which has also been sent to Chairman FRB, Secretary Petroleum, Chairman OGRA and other concerned official, Secretary General Oil Companies Advisory Council (OCAC), Syed Nazir Abbas Zaid has referred to the Council’s letter of November 04, 2024 in which it was acknowledged that the efforts undertaken by FBR to curb illicit trade, particularly concerning illegal petrol pumps, unlicensed oil agencies and cross-border smuggling. These measures significantly contributed to restricting illegal fuel trade, leading to a notable increase in nationwide fuel sales from September to December 2024 (compared to the same period last year) and substantial revenue generation for the government, positively impacting the economy.
However, the oil industry is concerned about the recent downturn in fuel product sales as of February 2025. Reliable sources indicate that illicit trade has resurfaced, with smuggled High-Speed Diesel (HSD) being sold at an alarmingly low price of approximately Rs. 180 per liter, compared to the current market price of Rs. 258.64 per liter. Additionally, the adulteration of Motor Spirit (MS) with Light Aliphatic Hydrocarbon and Solvent remains unresolved, with reports suggesting that adulterated MS is being sold at Rs. 160 per liter-significantly below the regulated price of Rs. 255.63 per liter.
“This resurgence of illegal fuel trade not only disrupts legitimate businesses but also results in substantial revenue loss of approximately Rs. 1.5 billion per day for the government. The adverse impact is reflected in declining fuel sales: HSD sales in February 2025 (419,494 MT) fell by 6% compared to February 2024 (445,263 MT),” said the OCAC.
Similarly, preliminary data indicates that MS sales for March 2025, when prorated, are projected to be 5% lower than March 2024. Additionally, planned sales volumes, based on the September to December 2024 trends, are lower by 13% for MS and 16% for HSD in March 2025, despite the onset of agricultural season.
Given the existing developments, OCAC has requested Director General Customs Intelligence to mitigate the resurgence of illicit fuel trade through the following actions: (i) closure of illegal retail sites, with strict measures to prevent their re-emergence;(ii) stronger border controls, which could contribute 4,000-8,000 MT of fuel daily to the economy; and (iii) restrict the import of white spirit, which is commonly used as an adulterant in HSD . Ends