ISLAMABAD — Pakistan is preparing to introduce a real-time digital monitoring system for petroleum products within the next month — a move officials say could choke off one of the country’s most persistent sources of revenue loss.

The system will follow every litre of fuel from the moment it is imported or refined, through storage and transportation, all the way to its sale at petrol stations. The aim: to dismantle the entrenched black market in petroleum products, which drains an estimated Rs300–500 billion from state coffers each year through smuggling, theft, misreporting, and fuel adulteration.

A Century-Old Law Overhauled

The new framework comes under the Petroleum (Amendment) Act 2025, passed by the National Assembly on Wednesday. It replaces provisions in the original Petroleum Act of 1934 — legislation that pre-dates Pakistan’s independence — with modern, tech-driven enforcement measures.

For the first time, deputy commissioners, assistant commissioners, and specially designated officers under the Customs Act 1969 will be empowered to track fuel movements digitally and seize smuggled or illegally stored products, even before a conviction is secured.

From Border Smuggling to Hidden Pumps

Oil industry stakeholders have been calling for such measures for years, warning that unchecked smuggling — particularly across the Iranian border — has been eroding both legitimate business and government revenue.

A 2020 probe ordered by then-Prime Minister Imran Khan found Iranian fuel worth over Rs250 billion entering Pakistan annually. A more recent intelligence dossier, submitted in April 2024, painted an even starker picture: roughly 10 million litres of Iranian petrol and diesel are smuggled in every day, aided by 533 illegal fuel stations, over 100 known smugglers, and corrupt personnel from multiple enforcement agencies.

Strict Penalties and Licence Crackdown

The amended law introduces some of the harshest penalties yet for offenders:

• Illegal trade in petroleum products — import, transport, storage, sale, refining, or blending — will carry a Rs1 million fine for first offences and Rs5 million for repeat violations.
• Unlicensed facilities will face closure, confiscation of all equipment and stock, and a Rs10 million fine.
• Premises caught selling or storing smuggled fuel face immediate shutdown, asset seizure, and a Rs100 million fine.

Licences for storage facilities (Form K under the Department of Explosives) must be renewed within six months if expired. Authorities have just 30 days to process renewal requests once paperwork and fees are complete.

Vehicles and Supply Chain Under Watch

Vehicles transporting smuggled fuel will be confiscated under the Customs Act. The seized goods will be handed to customs for legal action, with proceedings allowed to start before any conviction.

Monitoring will cover petrol pumps, storage depots, and fuel trucks in transit, with the Oil and Gas Regulatory Authority (Ogra) overseeing the rollout in collaboration with refineries and marketing companies.

Judicial Oversight and Appeals

Cases will be tried in Sessions Courts, while administrative enforcement will rest with local commissioners. Those penalised can appeal to the High Court within 30 days.

Why It Matters:
Beyond revenue, the reform could help eliminate adulterated fuel that damages engines and pollutes the environment. If implemented effectively, it would be the most comprehensive clampdown on fuel smuggling in Pakistan’s history — targeting both the illicit networks and the official negligence that have allowed them to flourish.