Refinery upgradation policy submitted to Cabinet

The government has submitted the refinery upgradation policy to the Cabinet and expects its approval by mid-July following clearance from the Economic Coordination Committee (ECC), Petroleum Minister Ali Pervaiz Malik said on Tuesday.

 

Speaking before the National Assembly Standing Committee on Petroleum, chaired by Syed Mustafa Mehmood, the minister said the policy is aimed at modernising Pakistan's refining sector and facilitating the transition to Euro-V fuel standards. He emphasized that refinery inefficiencies would not be passed on to consumers.

 

Malik said Pakistan continues to face challenges in sourcing refined petroleum products from international markets despite relatively lower taxation, noting that refining costs remain high while global supplies are constrained. He reiterated the government's commitment to gradually deregulating the petroleum sector and reducing its role in fuel price-setting while maintaining close oversight of the country's fuel supply chain.

 

The minister noted that although international crude oil prices have fallen below pre-conflict levels, refined products such as petrol and diesel remain expensive due to elevated premiums, freight, and insurance costs. Pakistan currently imports around 70% of its petrol requirements and one-third of its diesel demand.

 

He also stated that the petroleum levy, now exceeding Rs80 per litre, was introduced under commitments made to the International Monetary Fund (IMF). While removing the levy could lower fuel prices, he said doing so would require identifying alternative revenue sources to avoid fiscal pressures.

 

To improve market transparency, the government is considering publishing daily Platts benchmark prices, while a committee formed by the Prime Minister has already held several meetings on the proposal.

 

The minister further disclosed that work is underway to digitalise the petroleum supply chain and that international consultants have been engaged to develop a strategy for establishing strategic petroleum reserves to strengthen Pakistan's energy security. He added that offshore exploration is expected to resume after nearly two decades, while the government remains optimistic that circular debt in the petroleum sector will not increase during the current fiscal year.

 

During the meeting, lawmakers also raised concerns over LPG pricing and the implementation of notified rates. Malik explained that domestic LPG prices are linked to international propane and butane markets, with imports meeting around 60–70% of local demand. He added that LPG auctions remain suspended following a court stay order and that the matter has been referred back to the Oil and Gas Regulatory Authority (OGRA) for review.

 

The committee also expressed concern over the utilisation of Corporate Social Responsibility (CSR) funds, particularly in Sindh and Balochistan. Officials informed lawmakers that around Rs3 billion in CSR funds in Balochistan remain unutilised due to force majeure declarations by exploration companies, while questions were raised regarding the use of CSR allocations in Khyber Pakhtunkhwa. The committee directed the Director General of Petroleum Concessions to provide a detailed briefing on the matter at its next meeting.