Prime Minister Shehbaz Sharif is expected to remove long-standing bottlenecks in the Brownfield Refinery Policy as the Cabinet Committee on Energy (CCoE) meets on Tuesday to consider amendments that could determine the fate of billions of dollars in refinery upgrade investments. According to official documents, the CCoE will consider amendments to the Pakistan Oil Refining Policy for Upgradation of Existing (Brownfield) Refineries, 2023, following consultations with stakeholders, including the Oil and Gas Regulatory Authority (OGRA), the finance division and the petroleum industry. However, the proposed amendments have sparked concern within the refining sector over a plan to retrospectively reduce deemed duty protection from 7.5% to 5%, effectively penalising refineries for delays that, according to industry representatives, were caused by the government itself.
Sources said the proposed reduction is based on the government’s position that refineries failed to sign Upgrade Agreements within the stipulated timeframe. Refinery officials reject that claim, arguing that all companies had accepted the draft Upgrade Agreement in 2024 and were merely awaiting the government’s call for a formal signing ceremony at the Prime Minister’s House. “The agreements were never delayed because of the refineries,” a senior industry official said.
“The industry completed its part of the process and repeatedly requested the Petroleum Division, OGRA and other government forums to execute the agreements.” According to industry officials, refineries consistently pleaded their case before the Petroleum Division, OGRA and other stakeholders, maintaining that administrative delays on the government’s side prevented execution of the agreements. They argue it would be unjustified to retrospectively reduce incentives on the basis of delays for which the industry was not responsible. The dispute centres on deemed duty protection, a key component of the refinery upgrade incentive package designed to support billions of dollars in investment for producing Euro-V compliant fuels, reducing furnace oil output and improving the country’s fuel mix.
Industry representatives argue that a 7.5% tariff protection mechanism has remained in place for more than two decades, making the proposed reduction to 5% both unprecedented and unfair, particularly when the delay was beyond the refineries’ control…
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