Petroleum Division finalises refinery upgrade agreement, seeks ECC nod to unlock $6 billion investment

According to Profit, the Petroleum Division has asked the Economic Coordination Committee (ECC) to clear a newly concluded accord with the country's existing refineries. This is a major step toward putting an amended policy into effect, a policy that could draw roughly $6 billion into refining. The accord will set the contractual framework for refineries pursuing incentives under the 2023 brownfield upgradation policy.

The amended policy aims to raise Euro-V petrol and diesel output while cutting furnace oil. The Cabinet Committee on Energy approved the amendments on July 28, 2026, and the federal cabinet ratified them on August 10. Refineries wanting incentives must execute upgrade pacts with the Petroleum Division or its nominee by October 1, 2026. Inter State Gas Systems (ISGS) has been named to run implementation.

Under the revised framework, refineries missing the October 1 deadline must transfer deemed duty above 5% on high-speed diesel into a Refinery Upgradation Account, while on-time signers see that duty cut to 2.5% before it reaches zero by November 15, 2026. Projects must be completed within five years, followed by a one-year grace window that trims incentives by 1%, and unfinished projects can have their licences revoked by the competent authority. A refinery operational within three years may receive an extra 0.5% of the capped limit for each year saved.