Pakistan Approves Bonded Storage for Imported Petroleum Products

In response to recent supply chain vulnerabilities, particularly disruptions at the Strait of Hormuz, Pakistan's government has formally approved a new policy enabling foreign fuel suppliers to establish bonded storage facilities within the country.

The "Import on Foreign Supplier’s Account through Customs Bonded Storage Facilities" policy, pending formal ratification by the federal cabinet, is designed to bolster Pakistan's energy security. The Economic Coordination Committee (ECC), chaired by Finance Minister Muhammad Aurangzeb, approved the Petroleum Division's proposal. This initiative focuses on strengthening the nation's energy security architecture by promoting strategic petroleum reserves and facilitating bonded storage to ensure a sustainable petroleum supply chain.

The Federal Board of Revenue had initially raised concerns regarding collection and monitoring challenges. However, the proposal received broad support from other stakeholders, including the petroleum minister. The new guidelines will encompass the import of all grades of crude oil, petrol, high-speed diesel, jet fuel, furnace oil, LPG, and LNG. These imports will be permitted for domestic sales to oil marketing companies and refineries, as well as for re-export, provided they meet approved product specifications and are not subject to international sanctions or listed on Pakistan's Negative List.

Foreign suppliers will be able to maintain these bonded inventories at various approved locations, including major ports like Port Qasim, KPT/Keamari, Hub, and Gwadar, as well as other designated terminals. This policy marks a significant step in diversifying Pakistan's energy import strategy and mitigating risks associated with critical international shipping routes.

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The proposal focused on the development and strengthening of the key pillars of the country’s energy security architecture in the oil and gas sector, including indigenisation, the development of strategic petroleum reserves and the promotion of Customs bonded storage facilities to ensure a resilient and sustainable petroleum supply chain.