Pakistan Refinery Upgrade Agreements Expected in September

Agreements for the long-delayed upgrade of Pakistan’s refineries are now expected to be signed in the first week of September 2026, as the government works to finalise the required documents.

 

Officials said the signing, previously expected by the end of August, has been delayed partly due to pending arrangements for opening the necessary bank accounts in consultation with the Finance Division and the Controller General of Accounts.

 

The agreements are a key step in implementing the Brownfield Refinery Upgradation Policy, which aims to modernise Pakistan’s refining capacity and increase domestic production of cleaner petroleum products.

 

Refineries have, however, urged the government to waive penalties for delays, arguing that the prolonged process was largely beyond their control. Under the revised framework, refineries could be required to return 2.5% of the deemed duty retained on diesel from October 22, 2024, until the new agreements are signed.

 

Industry representatives say the policy has taken nearly seven years to finalise and has undergone several revisions. Refineries had previously provided Rs1 billion bank guarantees each to Ogra and prepared to complete the required formalities.

 

The implementation process was complicated after petroleum products were exempted from sales tax under the Finance Act 2024, which refineries said created significant financial challenges because input-stage sales tax could no longer be adjusted against output tax.

 

The revised policy requires refineries to sign individual upgrade agreements within 60 days, while the signing authority has been shifted from Ogra to Interstate Gas Company.

 

Refinery companies maintain they are ready to proceed and are seeking a waiver of the proposed penalty, saying they had already secured board approvals and arranged bank guarantees before the earlier deadline.