Islamabad has decided to introduce a bill in the National Assembly which could allow for the digital tracking of petroleum products in various stages of the production process. According to reports, officials aim to introduce tracking mechanisms from import and production to retail sales.
Tracking petroleum products could allow for a reduction in petroleum smuggling and may reduce instances of retailers mixing inferior fuels into high-grade fuel to illegally boost profit margins. As per motor vehicle experts, fuel adulteration results in significant “engine wear and poor performance”.
While not immediately apparent, the smuggling of petroleum products into the country results in greater damage. Smuggled petroleum evades taxes and duties, allowing for the generation of supernormal profits for all those involved in the malpractice. However, this phenomenon results in the national exchequer losing out on a staggering Rs300 to Rs500 in annual tax revenue.
Moved by Petroleum Minister Ali Pervaiz Malik, the Petroleum (Amendment) Act, 2025 aims to include clauses that can track petroleum products via the usage of information technology. Moreover, reports indicate that the amendment, if passed, will result in strict punishments for those involved in operating illegal fuel stations, decanting fuel and transporting smuggled petroleum products.
The introduction of the clauses to the amendment could grant government officials, such as deputy and assistant commissioners, along with a handful of other officers, the power to confiscate fuel, machinery and the equipment of fuel vendors not abiding by the law.
If the amendment gets passed, any entity convicted of importing, storing, refining, moving or supplying illegally procured petroleum products will be slapped with a Rs1 million fine. To discourage individuals from repeatedly engaging in the illegal sale of petroleum, those found to be violating the legislation repeatedly will have to face a larger fine of Rs5 million.
Moreover, the owner of a facility with an invalid license will be liable to pay a Rs10 million fine to the government in addition to facing a seizure of their stock and machinery. Facility owners who possess an expired licence will be given a period of six months to ensure their licences are renewed, after which they can be fined Rs1 million for non-cooperation.
The fear of paying the aforementioned hefty fines is likely to bring more petroleum importers, producers and retailers into the tax net, thereby boosting tax revenues. Moreover, ensuring that every entity is subject to the same rules will reduce the upside of not cooperating with the law, as the opportunity to generate supernormal profits by engaging in illegal activities will not seem as attractive given the possibility of facing a fine.