NA to consider stricter enforcement of petroleum levy

October 29, 2026 (MLN): The National Assembly is set to take up legislation that would tighten the collection of the petroleum levy and climate support levy by making payment a mandatory licence condition for oil marketing companies, refineries and other licensees, with defaulters facing financial penalties, possible licence suspension and imprisonment of up to three years.

The proposal is contained in the Petroleum Products (Petroleum Levy and Climate Support Levy) (Amendment) Bill, 2026, which would amend the Petroleum Products (Petroleum Levy and Climate Support Levy) Ordinance, 1961.

The bill makes levy payment a condition of licences issued by the Oil and Gas Regulatory Authority (OGRA).

It also revises the definitions of companies, oil marketing companies and refineries, strengthens payment obligations and removes the existing schedules in the ordinance.

Under the bill, companies, refineries and licensees would have to pay the levies from the date their licences are issued.

Refineries would have to deposit the levies in advance, before petroleum products leave their gates, while levies on imported petroleum products would be collected in the same way as customs duties.

A late-payment surcharge would apply at an annual rate equal to 1.5 times the prevailing six-month Karachi Interbank Offered Rate (KIBOR), or 12% per year, whichever is higher.

The surcharge would accrue daily from the date of default until the amount is paid. The relevant tax and customs authorities would be empowered to recover unpaid levies and surcharges using the existing customs and sales tax recovery procedures.

OGRA would be authorized to suspend or revoke the licences of companies that fail to pay the levies or related surcharges, in line with applicable laws and regulations.

For offences, anyone failing to pay the levies and surcharges in full could face up to three years in prison, a fine equal to the unpaid levy or surcharge, or both.

If the defaulter is a company, corporation, partnership or firm, its directors or partners could also be held liable, unless they prove that the offence took place without their knowledge or consent.

The bill also introduces reporting requirements. Companies, refineries and licensees would have to file monthly statements of levy payments with the relevant government division, along with an annual audited certificate confirming that the levies accrued and paid are accurate.

The certificate would have to be issued by an authorized audit firm in the first quarter of the following financial year, and the audit cost would be borne by the company, refinery or licensee concerned.

A digital mechanism would be set up for the tax and customs authorities to share data on levy payments and outstanding surcharges with the Petroleum Division.

The bill also provides for recovering outstanding levies and surcharges under the amended ordinance, while preserving liabilities and recovery proceedings that arose before the new law takes effect.

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