ISLAMABAD: The federal government has approved a new oil refining policy aimed at reducing Pakistan’s dependence on imported petroleum products, modernising the country’s refining industry, and strengthening long-term energy security.
The policy is expected to attract nearly $6 billion in fresh investment into Pakistan’s oil refining sector. It was formulated in consultation with key stakeholders, including the Special Investment Facilitation Council (SIFC), to encourage refinery upgrades and improve the country’s fuel production capacity.
Under the new framework, existing refineries will be encouraged to undertake major upgrades to increase the production of petrol and high-speed diesel (HSD) while significantly reducing the output of furnace oil, whose demand has declined in recent years.
The policy also aims to improve the quality of locally refined petroleum products by promoting the production of Euro 5-compliant fuels, which meet higher international environmental standards and help reduce vehicle emissions.
Seven-Year Incentive Package
To support refinery modernization projects, the government has introduced a seven-year incentive package for refineries that invest in producing Euro 5-standard fuels.
Officials believe these incentives will encourage refinery operators to accelerate expansion and technological upgrades, ultimately reducing Pakistan’s reliance on imported refined petroleum products.
As part of the implementation process, refinery companies will be required to sign formal implementation agreements with the Oil and Gas Regulatory Authority (OGRA) within 90 days of the policy’s approval.
The agreements will outline each refinery’s investment commitments, upgrade timelines, and compliance requirements under the new policy.
Investor Protection Measures
The new refining policy also includes several safeguards aimed at attracting both domestic and foreign investors.
According to the government, refineries investing under the policy will receive protection against future changes in taxation policies, environmental regulations, and foreign exchange rules, providing greater certainty for long-term investment decisions.
Strengthening Pakistan’s Energy Security
Government officials say the policy represents a major step toward enhancing Pakistan’s energy security by expanding domestic refining capacity, reducing dependence on imported fuels, improving fuel quality, and encouraging sustainable investment in the country’s energy sector.
The initiative is expected to strengthen Pakistan’s refining industry while supporting economic growth, reducing import costs, and ensuring a more reliable supply of high-quality petroleum products for consumers and industries alike.
