Pakistan approves new refinery policy to attract $6 billion in investment
Seven-year incentive package aims to modernize refineries, increase petrol and diesel production, and reduce furnace oil output
Haris Zamir
Business Editor
Experience of almost 33 years where started the journey of financial journalism from Business Recorder in 1992. From 2006 onwards attached with Television Media worked at Sun Tv, Dawn Tv, Geo Tv and Dunya Tv. During the period also worked as a stringer for Bloomberg for seven years and Dow Jones for five years. Also wrote articles for several highly acclaimed periodicals like the Newsline, Pakistan Gulf Economist and Money Matters (The News publications)
Pakistan unveils refinery policy to cut fuel imports, attract USD 6 billion
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Pakistan’s federal cabinet has approved a new oil refining policy aimed at reducing the country’s dependence on imported petroleum products, attracting an estimated USD 6 billion in investment to modernize refineries and significantly increase domestic production of cleaner transport fuels.
The policy, developed after consultations with stakeholders, including the Special Investment Facilitation Council, seeks to upgrade Pakistan’s aging refining sector, increase production of motor gasoline and high-speed diesel, reduce furnace oil output and strengthen the country’s long-term energy security.
Prime Minister Shehbaz Sharif approved the policy and praised Petroleum Minister Ali Pervaiz Malik and his team for finalizing the framework, according to an official statement.
The government said the policy would enable refineries to produce Euro-5 standard fuels through a seven-year incentive package designed to support refinery upgrades and improve fuel quality in line with international environmental standards.
Under the policy, oil refineries must sign legally binding upgrade agreements with the Oil and Gas Regulatory Authority within 90 days of the policy’s approval. The agreements are intended to strengthen oversight, implementation and accountability throughout the modernization process.
The framework also includes measures to attract foreign investment by providing greater policy certainty.
To facilitate financing, refineries will be allowed to open foreign currency accounts to service external debt. The policy also provides protection against adverse changes in taxation, environmental regulations and foreign exchange rules during the agreed investment period.
As part of the country’s energy security strategy, all refineries will be required to maintain crude oil inventories equivalent to 14 days of operations. Refineries processing imported crude must maintain an additional five days of strategic stocks.
The policy also proposes a 10% regulatory duty on imports of motor gasoline and high-speed diesel to encourage domestic refining and reduce reliance on imported refined fuels.
To qualify for the new incentive package, refineries must first clear outstanding petroleum levy and climate support levy obligations. Existing beneficiaries of previous refinery incentive packages will be required to relinquish those arrangements before opting into the new framework.
The government also recommended that refineries unable to complete upgrades within the prescribed timeline should not automatically face punitive action, allowing flexibility for project-related delays.
According to the government, the policy is intended to modernize Pakistan’s aging refineries, increase production of motor gasoline and high-speed diesel, sharply reduce furnace oil output, improve fuel quality and strengthen long-term energy security.
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