ECC Clears Bonded Petroleum Storage Plan to Strengthen Energy Security
ISLAMABAD: The Economic Coordination Committee has approved a policy allowing foreign fuel suppliers to bring petroleum products into Pakistan for storage in customs-bonded facilities, a move aimed at improving the country’s energy security after recent disruptions linked to the Strait of Hormuz. The plan, cleared on Monday under the chairmanship of Finance Minister Muhammad Aurangzeb, is expected to take effect after formal ratification by the federal cabinet.
Under the new framework, overseas suppliers will be able to store crude oil, petrol, high-speed diesel, jet fuel, furnace oil, liquefied petroleum gas and liquefied natural gas in approved bonded terminals without immediately triggering customs duties and taxes. Products may later be sold to Pakistani oil marketing companies and refineries or re-exported, giving suppliers flexibility to maintain inventories inside the country while preserving ownership until a local sale is completed.
The government has presented the scheme as part of a broader effort to strengthen strategic petroleum resilience and reduce Pakistan’s exposure to external supply shocks. The issue gained urgency after interruptions in shipping through the Strait of Hormuz highlighted the vulnerability of countries dependent on imported fuels. Officials believe that maintaining commercially owned stocks within Pakistan could provide additional supply options if international transport routes are disrupted.
Approved locations are expected to include major port and storage hubs such as Port Qasim, Keamari, Hub and Gwadar, along with designated inland facilities including Mahmood Kot and Machike in Sheikhupura. Foreign suppliers, operating through local consignees, would also be able to use Pakistan’s petroleum pipeline network to move bonded products between authorised locations before sale to licensed domestic buyers.
The policy sets a clear separation between foreign suppliers and the domestic entities that eventually purchase the fuel. Taxes, duties and sales-tax obligations would become payable when an oil marketing company or refinery takes the product out of bond for local consumption. Foreign suppliers and their consignees would not be required to register for sales tax solely because they are storing, blending, trading or re-exporting petroleum products under the scheme.
The Federal Board of Revenue had raised concerns over monitoring and revenue administration, but other stakeholders backed the Petroleum Division’s proposal. The framework therefore includes customs documentation, electronic tracking and daily stock-reporting requirements. Ogra will receive inventory information from approved bonded locations, while system changes involving the State Bank and FBR are expected to support partial releases and movement of products through the customs network.
The policy also gives the government limited emergency powers. In a formally declared crisis such as war, major armed conflict, a severe natural disaster or a complete collapse of domestic supply, authorities could request access to petroleum stocks held in bonded facilities. Any requisitioned fuel would have to be purchased at prevailing international market prices, and the policy specifically excludes routine shortages, ordinary price volatility or general geopolitical uncertainty from these emergency provisions.
Pakistan’s existing petroleum import system for licensed oil marketing companies and refineries will continue alongside the new arrangement. The government expects the additional model to attract international suppliers, expand storage options and improve the ability of the domestic market to respond to disruptions. The next step is federal cabinet ratification, followed by regulatory and customs implementation to make the bonded-storage mechanism operational across approved terminals.