The Petroleum Division has submitted amendments to the Brownfield Refining Policy 2023 to the Cabinet Committee on Energy (CCoE), proposing new investor protection measures and a seven-year incentive package aimed at supporting nearly $6 billion in refinery upgrade projects.
The revised policy seeks to modernize Pakistan’s refining sector by encouraging investment in refinery upgrades, increasing production of Euro-V compliant petrol and diesel, reducing furnace oil output, and improving the country’s energy security.
According to the proposal, six new provisions have been introduced to provide greater confidence to foreign investors and financial institutions involved in refinery modernization projects. These include stability and parity clauses, protection against unfavorable changes in taxation and regulations, and permission for refineries to establish onshore foreign currency accounts for servicing foreign debt.
The policy draft was reviewed by several government bodies, including the Special Investment Facilitation Council (SIFC), Finance Division, Federal Board of Revenue (FBR), Board of Investment (BoI), Law and Justice Division, National Crisis Management Committee (NCMC), and Oil and Gas Regulatory Authority (Ogra).
Under the proposed framework, existing refineries will be required to sign legally binding Upgrade Agreements with Ogra within 90 days of policy notification to become eligible for incentives. These agreements will define project timelines, Euro-V fuel production targets, capacity improvements, furnace oil reduction plans, and other implementation milestones.
To encourage investment, the government has proposed a minimum 10% customs or regulatory duty on imported petrol and diesel for seven years. Eligible refineries will also receive 10% deemed duty or tariff protection on ex-refinery prices of petrol and diesel, while imported plant, machinery, and equipment for upgrade projects will be exempt from sales tax.
The proposed policy also includes safeguards to ensure that financial incentives are used only for refinery modernization. Jointly operated escrow accounts will be established, with withdrawals allowed after financial closure and completion of specified project milestones.
The government has included strict monitoring measures, including independent technical verification, biannual audits by recognized audit firms, and penalties for delays or abandonment of projects. Refineries with unresolved government liabilities will not qualify for incentives until settlement agreements are completed.
The revised policy covers upgrade plans for major refineries, including Pakistan Arab Refinery Limited (PARCO), Attock Refinery Limited (ARL), Pakistan Refinery Limited (PRL), National Refinery Limited (NRL), and Cnergyico.
The projects are expected to expand refining capacity, increase local production of cleaner Euro-V fuels, and reduce dependence on lower-value furnace oil output.
