Government Moves to Revive USD 6bn Refinery Upgrade Programme

The government has proposed amendments to the Brownfield Refining Policy 2023 to revive Pakistan's stalled refinery modernisation programme, aiming to unlock nearly USD 6 billion in investment across the country's five existing oil refineries.

 

The Petroleum Division submitted the proposed changes to the Cabinet Committee on Energy (CCoE) in July 2026. If approved, the revised framework will replace the current policy governing refinery upgrade projects.

 

The amendments extend the incentive period from the existing framework to seven years and introduce additional investor protection measures. Refineries signing legally binding upgrade agreements will continue to receive 10% tariff protection through deemed duty on ex-refinery prices of motor spirit (MS) and high-speed diesel (HSD), while imports of upgrade-related machinery will remain exempt from sales tax under the FY27 Finance Act.

 

The programme covers Pakistan's five operational refineries—PARCO, Attock Refinery, National Refinery, Pakistan Refinery, and Cnergyico—which together have a refining capacity of approximately 20.5 million tonnes per annum (MTPA). The planned upgrades aim to increase production of petrol and diesel, reduce furnace oil output, and enable the production of Euro-V compliant fuels, lowering the country's reliance on imported refined petroleum products.

 

The revised policy also strengthens compliance requirements through escrow accounts, bank guarantees, third-party technical audits, and financial penalties for non-compliance to ensure incentive funds are used exclusively for refinery modernisation.

 

Implementation of the original policy has been delayed due to tax-related issues and slow execution. While some refiners had expressed readiness to proceed, others had yet to sign upgrade agreements, prompting the government to revise the framework in an effort to accelerate investment and modernisation.