Pakistan has taken a host of strict measures to control smuggling of commodities including oil supplies from Iran that led to an increase of up to 340% in legal trade.
Though the government has sprung into action to curb the smuggling of Iranian oil, the domestic oil industry claims the illegal trade has started rising again, sparking concerns among market players.
In a recent meeting of the federal cabinet, the interior and narcotics secretary spoke about the anti-smuggling measures and operations undertaken over the last one year.
He informed ministers and advisers that the government had cracked down hard on the inward and outward smuggling of commodities, including the essential items, such as wheat, sugar, urea, cigarettes, oil, gold, tyres and tea.
Action had been taken through setting up 56 joint check posts, the digitisation of petrol pumps, introducing tracking systems for vehicles carrying Iranian oil and the completion of a sea barrier at Jiwani.
The government has also formed a seafront task force under the Pakistan Maritime Security Agency and is establishing 35 digital enforcement stations.
The secretary revealed that the overall increase in legal imports across all categories reached 340.8%, which indicated a significant rise in documented trade.
Separately, in a letter written to Director Customs Intelligence of the Federal Board of Revenue (FBR) Abdul Basit Abbasi, the Oil Companies Advisory Council (OCAC) drew his attention to the rise in smuggling of Iranian oil.
The industry lobby pointed out that they were encountering a decline in sales of petroleum products as well as the loss of revenue in the backdrop of resurgence of illegal trade.
"We refer to our letter dated November 4, 2024, in which we acknowledged the efforts undertaken by the FBR to curb illicit trade, particularly concerning the illegal petrol pumps, unlicensed oil agencies and cross-border smuggling," the OCAC said, adding that those measures significantly contributed to restricting the illegal fuel trade, leading to a notable increase in nationwide fuel sales from September to December 2024 (compared to the same period of last year) and substantial revenue generation for the government.
However, it expressed concern over the recent downturn in fuel sales in February 2025. Reliable sources indicate that the illicit trade has resurfaced as the smuggled high-speed diesel is being sold at an alarmingly low price of approximately Rs180 per litre compared to the current market price of Rs258.64 per litre.
Additionally, the mixing of light aliphatic hydrocarbon and solvent with petrol goes on unchecked, with reports suggesting that adulterated motor spirit is being sold for Rs160 per litre, significantly lower than the regulated price of Rs255.63 per litre.
This resurgence of illegal fuel sales not only disrupt legitimate businesses but also result in a substantial revenue loss of roughly Rs1.5 billion per day for the government.
The OCAC pointed out that the adverse impact was reflected in the declining fuel sales, which included a 6% fall in high-speed diesel sales to 419,494 metric tons in February 2025 as compared to sales of 445,263 MT in February 2024.
Similarly, preliminary data indicates that motor spirit sales will be 5% lower in March 2025 compared to the same month of last year. Additionally, planned sales, based on September-December 2024 trends, are down 13% for motor spirit and 16% for high-speed diesel in March 2025, despite the onset of agricultural planting season.
"Given these developments, we request you to mitigate the resurgence of illicit fuel trade through the closure of illegal retail sites, with strict measures to prevent their re-emergence and stronger border controls, which can contribute 4,000-8,000 MT of fuel daily to the economy," the OCAC said.
It also underscored the need for placing restrictions on the import of white spirit, which was commonly used as an adulterant in high-speed diesel.
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