Pakistan moves to toughen petroleum law to fight fuel smuggling

Pakistan’s federal government introduced on Thursday amendments to the country’s nearly century-old petroleum law, granting expanded powers to local officials to crack down on fuel smuggling and illegal sales.

The Petroleum Act (Amendment) Bill, 2025, was presented in the National Assembly by Energy Minister Ali Pervez Malik and referred to a parliamentary committee for review. The proposed changes target fuel trafficking, impose stricter penalties, and shift trial jurisdiction from magistrates to sessions courts.

Officials designated under the Customs Act of 1969 — including deputy and assistant commissioners — would be authorized to investigate, seize, and prosecute individuals involved in the unauthorized sale, storage, and transport of petroleum products.

The bill introduces 14 amendments across seven sections of the original Petroleum Act of 1934, including Sections 2, 4, 23, 24, 25, 26, and 27. A key provision calls for real-time digital tracking of petroleum reserves and supply chains to detect smuggling.

Under the revised law, first-time offenders engaged in illegal fuel activity could face fines of up to PKR 1 million. Repeat violators could be fined up to PKR 5 million. Those operating unlicensed petrol pumps may be fined as much as PKR 10 million, with their equipment and fuel subject to confiscation.

The law provides a six-month grace period for fuel operators with expired licenses to renew them. Failure to comply would result in facility closures and asset seizures.

Stronger penalties are proposed for individuals distributing smuggled fuel. Such violators could face fines of up to PKR 100 million, the revocation of licenses, and the forfeiture of all equipment, petroleum products, and transport vehicles.

The bill also authorizes deputy and assistant commissioners to act as magistrates in these cases. Affected parties would have the right to appeal decisions in the high court within 30 days.

A new clause added to Section 4 mandates the development of a real-time digital system to monitor petrol stations, storage sites, and reserve tanks. The platform is intended to enable coordinated enforcement by multiple agencies.

What prompted the legislation?

The proposed legislation comes amid growing concern over the economic and security impact of fuel smuggling.

A recent report by the Prime Economics think tank estimated that 2.8 billion liters of petroleum products are smuggled into Pakistan annually from neighboring Iran. The government reportedly loses about PKR 270 billion each year due to this illicit trade.

The report cited porous borders with Afghanistan and Iran, outdated customs infrastructure, and poor interagency coordination as key enablers of smuggling. The Federal Board of Revenue reported seizures of smuggled goods worth more than PKR 3 billion in 2022 and PKR 2.4 billion in 2024.

According to the report, the proposed amendments could help tighten control over illicit fuel trade and improve regulation in the energy sector. However, it cautions that effective enforcement will depend on adequate resourcing and coordination between federal and provincial authorities.