Refineries to sign upgrade agreements with Petroleum Division within 45 days

Pakistan's federal cabinet has signed off on revisions to the refinery upgrade policy, under which existing plants must enter into agreements with the Petroleum Division within 45 days to begin their modernisation work, according to The Express Tribune as carried by Profit. The changes amend the 2023 brownfield policy and strip the Oil and Gas Regulatory Authority (Ogra) of its role in the incentive mechanism, with Inter State Gas Systems (ISGS) named as the implementing agency.

Under the revised setup, incremental incentives will flow into refinery upgrade accounts held by the Petroleum Division rather than Ogra's escrow account, and ISGS will open and run those accounts, monitor projects and make payments. A Project Management Unit of technical and financial experts will oversee implementation, and independent third-party consultants have been given a stronger role in certifying progress, so refineries that miss physical targets or default on agreements will not receive incentives until corrective steps are taken.

The Petroleum Division told cabinet that the $6 billion modernisation programme could save about $1 billion a year in foreign exchange, with upgrades intended to cut furnace oil output and raise petrol and diesel production. Saudi Arabia has also expressed interest in investing in the sector, which the amended policy is expected to support.