Petrol dealers warn proposed bill could undermine legal fuel trade

ARACHI: The All Pakistan Petroleum Dealers Association (APPDA) has issued a strong warning over the proposed Petroleum (Amendment) Act 2025, expressing that while the bill aims to curb fuel smuggling, it could instead punish law-abiding petrol retailers and disrupt the national energy supply chain.

Addressing fuel station owners on Friday, APPDA Spokesperson Hassan Shah said the bill grants sweeping powers to local authorities without judicial oversight or regulatory checks. He warned that this could lead to coercion, misuse, and the “arm-twisting” of retailers to meet arbitrary enforcement targets.

Pakistan has over 11,800 registered petrol pumps, of which more than 83 per cent are operated by independent retailers. These outlets work as commission agents under licensed Oil Marketing Companies (OMCs) and have no role in fuel importation, production, or adulteration.

Despite this, the proposed amendments impose strict liability on retailers and allow district officials to seal stations, impose fines or confiscate assets -- often without proof of wrongdoing or prior notice.

“If passed in its current form, this bill would hold dealers responsible for issues beyond their control, while leaving smugglers and unregulated distributors untouched,” Shah warned.APPDA’s concerns are amplified by the scale of fuel smuggling in Pakistan. Recent estimates suggest over 10 million litres of Iranian petrol and diesel are smuggled into the country daily, resulting in annual tax losses exceeding Rs227 billion. In Balochistan alone, the illegal fuel trade is estimated at $400 million -- almost three times the province’s legal trade volume. The Oil Companies Advisory Council (OCAC) has also flagged daily losses of Rs1.5 billion to the national exchequer from the illicit petroleum trade.

Shah emphasised that while petrol dealers firmly oppose smuggling, enforcement must be targeted and transparent.In its formal communication to government authorities, APPDA has recommended several key revisions to the bill.

These include that retailers should only be held liable when there is clear evidence of prior knowledge or direct involvement in unlawful activity. Accountability should first be established at the level of the relevant OMC before any punitive action is taken against pump operators. APPDA has also demanded that no sealing, fines, or confiscation be permitted without prior notice, investigation, and formal documentation -- except in situations that pose an immediate public hazard.

Furthermore, the association has proposed that the Oil and Gas Regulatory Authority (Ogra) be reaffirmed as the primary regulatory body, with enforcement actions to be formally reported within 48 hours. It also called for the creation of a Petroleum Retailers Grievance Redressal Committee (PRGRC) to provide a platform for appeals and temporary operational relief during disputes. Retailers acting as whistleblowers should be granted confidentiality and immunity. In cases where government officials violate procedural safeguards, they should face disciplinary action, and affected petrol pump owners must be compensated. APPDA further urged that sections such as 23(3A-3C) be amended to remove strict liability, requiring proof of intent or collusion. In addition, Section 4(kk) should provide a grace period for the implementation of digital tracking systems.

Despite a surge in illegal fuel trade, Pakistan’s petroleum sales hit a 25-month high of 1.58 million tonnes in late 2024, attributed to targeted crackdowns and falling fuel prices. However, industry stakeholders warn that this progress could be undermined if legitimate operators are pushed out.