Smuggled Iranian Diesel – Pakistan Losing Billions Per Month

The steep decline in Rupee’s value was not enough that now smuggling of Iranian dieksel is making up for the already-mounting economic deficit in Pakistan, replacing 40% of the consumption of domestic diesel.

As per media reports, the country’s melting economy is bearing a hefty revenue loss of Rs. 10.2 billion per month in the face of smuggled Iranian diesel. No law enforcement from authorities like the Federal Board of Revenue (FBR) is held responsible for the considerable dent in the country’s dwindling economic graphs.

The oil Gas and Regulatory Authority (OGRA) has reported a substantial loss in legal sales revealed by authorized Oil Marketing Companies (OMCs). The average consumption of diesel was 23,000-30,000 tons per day during March-June last year, which, as per sales since February 2023, has now decreased to 15,000 tons per day. Alarming enough, the slump continues to date. 

Furthermore, OGRA informed that 4,000 tons of diesel are smuggled from the Iran border per day, resulting in a huge loss of about 143,000 liters per month. In Rupees, the loss per month is a staggering 10.2 billion to Pakistan’s already shattering economy.

The episode raises the question regarding the performance of FBR and other concerned authorities. Meanwhile, the lack of border control measures and porous border makes it easier for smugglers to illegally bring diesel into the country.  

The Reason

Sources have stated that the reason behind the prevailing issue is a significant price difference between domestic and Iranian diesel. Iran offers a heavy subsidy on domestically produced diesel to its fuel sellers providing them a perfect chance to smuggle it to Pakistani sellers at a comparatively lower price.

Adding more to the drama, the complex tax system imposed in Pakistan makes domestic diesel more expensive, nudging the local sellers to get smuggled cheap diesel from Iran.