Ogra probes Rs42bn loss from petrol adulteration with solvents

KARACHI: The Oil and Gas Regulatory Authority (Ogra) has launched a probe into the excessive production of solvents and their use in petrol adulteration, which the oil sector estimates is costing the national exchequer around Rs42 billion annually.

The investigation follows a report by The News last week highlighting the large-scale production of solvents and their diversion for petrol adulteration, prompting regulatory action.

Ogra has sought data from the oil sector on solvent production and its financial impact through revenue losses caused by adulteration.

According to sources, the Oil Companies Advisory Council (OCAC) -- the representative body of the oil industry -- compiled data on solvent production and imports and submitted it to the regulator.

The OCAC’s findings showed that production by local refineries and imports under HS code 2710.1250 are on the rise. While solvents are primarily used in the chemical and other industries, the reported quantities produced and imported far exceed legitimate industrial demand.

In the fiscal year 2024-25, local refineries produced 104,741 metric tonnes (MT) of solvents, while one refinery produced an additional 136,000 MT of naphtha that was sold as solvent.

“The volumes above industrial requirements are making their way to petrol pumps for adulteration,” the oil body noted, adding that this was causing substantial losses to the exchequer, while consumers received substandard fuel harmful to vehicle engines and the environment.

The OCAC estimated that adulteration resulted in losses of Rs42 billion annually in forgone petroleum levy (PL) and climate support levy revenues. To curb the practice, the council recommended imposing PL and climate support levy, in addition to customs duty, on solvents, kerosene, light diesel oil and white spirit.