ISLAMABAD – The Sindh government has asked the Petroleum Division to make it mandatory for all petroleum-importing companies, including Pakistan State Oil (PSO), to submit bank guarantees against the Sindh Infrastructure Development Cess (SIDC). The move, outlined in a letter dated October 15, 2025, could significantly impact the liquidity and operations of oil marketing companies (OMCs) and refineries across the country.
The provincial government’s request follows a decision made during the Sindh cabinet meeting on October 6, which stated that import consignments should no longer be released based on undertakings alone. Instead, importers must now provide bank guarantees as a compliance measure with the Supreme Court’s 2021 directive (CPLA No. 4288 of 2021). Sindh authorities have warned that non-compliance could carry legal consequences, emphasizing the importance of aligning with judicial orders.
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However, industry representatives have expressed serious concern over the decision, warning that requiring multi-billion-rupee guarantees for each oil cargo could strain financial resources and disrupt the fuel supply chain. They cautioned that such a policy would create liquidity challenges, delay import clearances, and potentially lead to nationwide fuel shortages. The impact, they noted, would be particularly severe on PSO, which already faces cash-flow issues due to delayed government payments.
Moreover, experts believe enforcing bank guarantees could result in congestion at Karachi and Port Qasim, where most petroleum imports are handled. Delays in processing could raise demurrage costs, affect refinery operations, and destabilize national fuel distribution networks. Industry officials urged both provincial and federal governments to coordinate before taking any step that could jeopardize the country’s energy security and market stability.
Sources within the Petroleum Division confirmed that the Sindh government’s letter has been received and is under legal review. The division plans to consult with the Law Division, OGRA, and other stakeholders before making a final decision. Officials stressed that the matter is highly sensitive and must be resolved through mutual consultation to prevent disruption.
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The SIDC, introduced in 1994 to finance Sindh’s infrastructure, has long been a contentious issue between the provincial and federal governments. Analysts warn that if the current standoff is not resolved promptly, it could escalate into a broader policy dispute — testing intergovernmental coordination and the balance between Sindh’s taxation authority and the federal responsibility to ensure uninterrupted national fuel supplies.