Senate panel flags massive smuggling, tax evasion, revenue losses

• Smuggled diesel sold at Rs240 per litre in Quetta, Rs210 in rural Balochistan; cannabis, opium openly cultivated in Qila Abdullah valley, Senator Farooq says
• Customs officials say their presence is limited to settled areas; oil firms absent in several Balochistan areas

ISLAMABAD: A Senate panel on Tuesday raised alarm over widespread smuggling, weak enforcement and tax evasion, warning that the unchecked flow of petroleum and other goods, particularly in Balochistan and Khyber Pakhtunkhwa, is causing colossal losses to the national exchequer and undermining the formal economy.

During a meeting of the subcommittee of the Senate Standing Committee on Interior held here, with Senator Saifullah Abro in the chair, Senator Umer Farooq highlighted urgent need to curb petroleum smuggling in Balochistan, noting that diesel was currently being sold at Rs240 per litre in Quetta and Rs210 in rural areas.

Customs officials informed the committee that 75,000-litre diesel was confiscated in Hub the previous night, while additional quantities were seized in Hyderabad. They said they have no operational presence along the border with Iran or in districts such as Panjgur, Gwadar, Kech and Washuk, and are currently limited to settled areas of Balochistan.

Senator Farooq said large quantities of cannabis and opium were being openly cultivated in the Qila Abdullah valley, with little enforcement action being taken.

While expressing concern that petroleum worth Rs222 million had been seized by the customs authorities in past five years, Senator Abro questioned where the fuel was being transported. He noted convoys of dozens of vehicles were reportedly involved in smuggling petroleum products.

The convener of the subcommittee called for a comprehensive report tracing the movement and destination of such fuel. He said the Balochistan chief secretary should be summoned for a personal hearing to provide a detailed briefing on measures taken to control smuggling and related issues so that the committee may be fully apprised.

Customs officials told the committee that up to 3m litres of petroleum products per day were currently permitted for local populations to import from Iran, reduced from the previous limit of 6.5m litres. They revealed that major oil-marketing companies, including PSO, Shell and Attock, are not operational in several areas of Balochistan.

The convener directed the relevant authorities to send a letter to PSO seeking detailed data on petroleum supplies to Balochistan, including transportation costs paid to tanker operators for supplying products to these areas. Also, the committee was informed that a letter had been written to the member customs regarding tax exemptions applicable in erstwhile Fata, Pata and adjoining areas. It was also reported that steel factories imported raw materials worth Rs100 billion, while oil and ghee manufacturers imported hydrogenated vegetable oil, vegetable ghee and vanaspati ghee worth Rs320bn since 2021 in tax-exempt areas.

Customs officials stated that 409 importers were currently operational in Pakistan.

The convener sought details of all companies operating in tax-free areas, noting that these regions increasingly became hubs of smuggling. Instead of development, these areas witnessed tax evasion, and such activities were harming the country, he said.

The subcommittee decided to summon the CEO of Tribal Electric Supply Company in the next meeting.

Customs authorities were directed to compile comprehensive data on the total volume of goods transported to these regions, as well as details of items manufactured there and subsequently sold in other parts of the country without payment of customs duties.

Senator Abro highlighted the disparity in the tax system, stating that those who pay taxes were burdened further while others evade them.

Theft of cigarette cartons

The theft of over 2,000 cigarette cartons from FBR godowns in Swabi and Mardan also came under discussion during the meeting, as the convener called for strict action against the tobacco industry and ordered the installation of pickets at all such facilities to ensure proper monitoring of stock movement.

He also called for maintaining effective checks and balances on incoming and outgoing tobacco stocks, underscoring the need to take concrete steps against those involved in illegal activities in order to enhance tax collection from grey areas.

An FBR official informed the committee honest officers were deployed in KP to curb corruption. He said several new disciplinary proceedings have been initiated against dishonest officials, with many already dismissed from service during the current tenure.

He highlighted measures taken to encourage integrity by recognising and rewarding honest officers for their performance.

Referring to another case involving the embezzlement of Rs1.28bn in the 765kV Dasu-Islamabad Transmission Line Grid Station project (Islamabad West, Lot-IV), the convener noted that the amount had not been included in the bid evaluation.

Senator Abro directed the FIA and the National Accountability Bureau to take action against the contractor as well as officials of NTDC involved in the matter. He also directed strict action against non-performing customs officials posted in Balochistan, as well as in the tax-free zones of Fata and Fana (Federally Administered Northern Areas). He further instructed that the assets of such officials be monitored to ensure accountability.

Published in Dawn, April 15th, 2026