Pakistan’s $6 Billion Refinery Upgrade Plan Faces Fresh Uncertainty

Pakistan’s long-delayed $6 billion refinery modernization program is facing renewed uncertainty after the Oil and Gas Regulatory Authority (Ogra) proposed changes to key incentives under the Brownfield Refinery Policy 2023.

The proposed amendments would reduce the deemed duty incentive on high-speed diesel for certain refineries that did not meet the deadline for signing implementation agreements.

Proposed Changes to Incentive Structure

Under the draft proposal, the incentive would be reduced from 7.5 percent to 5 percent for refineries that failed to sign agreements by October 22, 2024.

The remaining portion, after applicable taxes, would be redirected to the Inland Freight Equalization Margin Pool, according to the proposal.

Industry Raises Concerns Over Viability

Refinery operators have expressed concern over the proposed changes, arguing that reducing incentives at this stage could affect the financial viability of long-planned upgrade projects.

Industry representatives maintain that delays in meeting agreement timelines were influenced by unresolved policy and taxation issues beyond their control.

Government Review Underway

Officials from the Petroleum Division said the proposal has added further uncertainty to the upgrade program, which has already faced multiple delays.

A recent meeting of the National Committee for Monitoring and Coordination reviewed the matter and assured stakeholders that their concerns would be considered before final decisions are made.

Refinery representatives have also been encouraged to move forward with signing pending agreements once the Finance Bill 2026–27 is approved.

Key Energy Modernization Plan

The Brownfield Refinery Policy, introduced in 2023, aims to attract investment of around $6 billion to upgrade five major refineries, including PARCO, Attock Refinery, National Refinery, Cnergyico, and Pakistan Refinery Limited.