Sindh makes bank guarantees mandatory for petroleum imports

KARACHI: The Sindh government has made it mandatory for petroleum product importing companies to submit bank guarantees for the release of their consignments, replacing the previous practice of submitting undertakings.

According to a communique issued by the Sindh excise, taxation and narcotics department to the Ministry of Energy, the matter regarding the release of petroleum products based on undertakings for payment of the Sindh infrastructure development cess was presented before the provincial cabinet in its meeting held on October 6, 2025 for deliberation and decision.

The deputy secretary (cabinet), services, general administration and coordination department of Sindh conveyed that the provincial cabinet deliberated on the matter and decided to request the Ministry of Energy, Petroleum Division, Government of Pakistan, to direct Pakistan State Oil (PSO) and all other petroleum product importing companies to submit bank guarantees (BGs) instead of undertakings against the release of their consignments.

“This is in compliance with the Supreme Court’s order dated September 1, 2021 in CPLA No 4288 of 2021 and constitutes a condition precedent applicable to all petitioners,” the communique stated.

In view of the provincial cabinet’s decision and the Supreme Court’s directions, the department requested that PSO and all petroleum importing companies be instructed to submit bank guarantees against the release of their consignments without delay. It further clarified that henceforth, no consignments of petroleum products would be released on the basis of undertakings alone, as any non-compliance with the Supreme Court’s order would amount to defiance of the Court’s directives and may entail legal consequences.

The department also informed all petroleum importing companies that the undertakings previously submitted must be replaced with bank guarantees, as such undertakings were filed in violation of the court’s order and without the prior consent or approval of the government.

Executives in the oil sector, however, described the provincial government’s decision as a “disaster” for the industry and criticised the Oil and Gas Regulatory Authority (Ogra) for what they termed its failure to act.

“This is the biggest blunder; Ogra has been unable to deal with provincial governments that are imposing such measures even though petroleum is a regulated sector,” said a senior executive of an oil company.