ISLAMABAD, November 1, 2026: The federal government has decided to tighten laws governing petroleum levy and climate support levy collection, proposing up to three years in prison, heavy fines and cancellation of licences for companies failing to meet their payment obligations.
The proposed amendments, being pursued ahead of an important International Monetary Fund (IMF) Executive Board meeting, are aimed at strengthening revenue collection, ensuring compliance with IMF conditions and preventing delays in levy payments by oil refineries and petroleum companies.
According to official documents, non-payment of petroleum levy could result in imprisonment for up to three years or substantial financial penalties, while companies violating the requirements could face suspension or cancellation of their operating licences.
The government also plans to introduce stricter recovery procedures and financial surcharges for delayed payments.
Three-year imprisonment and heavy fines proposed
Under the proposed legal changes, failure to pay petroleum levy could become punishable by imprisonment for up to three years or a heavy fine.
The amendments would also allow authorities to impose a penalty equivalent to the unpaid levy amount.
Company directors and partners could be held responsible for non-compliance, extending accountability beyond the business entity itself.
The proposed provisions are intended to discourage companies from withholding government revenue and strengthen enforcement against persistent defaulters.
Oil companies risk suspension of OGRA licences
The government plans to link petroleum levy payments directly to licensing requirements enforced by the Oil and Gas Regulatory Authority (OGRA).
Under the proposed framework, timely payment of the levy would become a condition of maintaining an OGRA licence for refineries and oil companies.
Failure to meet these obligations could lead to suspension or cancellation of the relevant licence.
OGRA would also receive powers to take action against companies violating levy-related requirements.
The proposed measures would make compliance with levy payments a key regulatory obligation for businesses operating in the petroleum sector.
Late payments to attract surcharge of at least 12%
The proposed amendments also introduce financial penalties for companies that delay petroleum levy payments.
According to the documents, the surcharge would be calculated at a rate of at least 12% annually or 1.5 times the six-month Karachi Interbank Offered Rate (KIBOR).
The provision is intended to discourage delayed payments and compensate the government for revenue withheld beyond the prescribed deadline.
With KIBOR-linked calculations forming part of the proposed framework, companies could face substantial additional liabilities if they fail to deposit levies on time.
Customs and sales tax laws to support recovery
The government also plans to strengthen its powers to recover unpaid petroleum levy through existing customs and sales tax enforcement mechanisms.
Under the proposed changes, outstanding levy amounts could be recovered using procedures available under customs and sales tax laws.
The measure would provide authorities with additional legal tools to pursue unpaid government dues.
The amendments are also intended to improve coordination between regulatory and revenue-collection institutions.
Monthly reports and annual audits to become mandatory
The proposed framework would introduce additional reporting and compliance requirements for petroleum companies and refineries.
Companies would be required to submit monthly reports detailing their petroleum levy payments.
Oil companies would also have to provide annual audited certificates to verify compliance with their financial obligations.
The documentation requirements are intended to strengthen oversight, improve transparency and enable authorities to identify discrepancies in levy payments.
Company directors and partners could also face accountability for unpaid levies under the proposed provisions.
Amendments linked to IMF commitments
The decision to strengthen petroleum levy and climate support levy laws comes ahead of an important IMF Executive Board meeting.
According to the documents, the government is pursuing the amendments as part of efforts to meet IMF-related commitments and improve the collection of revenue from the petroleum sector.
The proposed legislation focuses on timely payments, stronger enforcement powers and improved financial reporting by companies responsible for depositing levies.
Officials intend to address weaknesses in the existing recovery framework and ensure that government revenue is collected without unnecessary delays.
The amendments would also increase the regulatory consequences of non-compliance by linking levy payments to operating licences and introducing stricter financial penalties.
The government maintains that the proposed changes are designed to improve transparency, strengthen accountability and safeguard public revenue through more effective collection of petroleum-related levies.