# Govt Sets Six-Year Deadline for Refinery Upgrades, Offers Extra Incentive for Early Completion
**ISLAMABAD:** The government has directed oil refineries to accelerate their multibillion-dollar modernisation projects under the amended **Brownfield Refining Policy 2023**, setting a **six-year deadline** for completion while offering an additional incentive to refineries that finish their upgrades within three years.
At a meeting with refinery heads, **Petroleum Minister Ali Pervaiz Malik** conveyed the Federal Cabinet’s decisions and directed companies to finalise and sign their upgrade agreements at the earliest.
The meeting was attended by Petroleum Secretary **Hamed Yaqoob Sheikh**, Additional Secretary Petroleum **Zafar Abbas**, Attock Refinery CEO **Adil Khattak**, National Refinery CEO **Asad Hasan**, Cnergyico PK Vice Chairman **Usama Qureshi**, Pak-Arab Refinery Managing Director **Irteza Qureshi** and Pakistan Refinery Managing Director **Mohsin Mangi**.
The minister said the Cabinet had approved amendments to the **Pakistan Oil Refining Policy for Up-gradation of Existing (Brownfield) Refineries, 2023**, aimed at removing obstacles that had delayed the signing and implementation of refinery upgrade agreements.
Under the revised framework, the overall project implementation period has been reduced to **six years**, while the incentive mechanism will remain available for seven years. Refineries completing their upgrade projects within **three years** will qualify for an additional **0.5% incentive**.
Malik urged refinery managements to move swiftly towards finalising the agreements and expressed the government’s desire to have the agreements signed in the presence of **Prime Minister Shehbaz Sharif**. He also directed the Petroleum Division and refinery managements to resolve all outstanding issues without delay.
The Cabinet has also reduced the timeframe for signing upgrade agreements with the government from **90 days to 60 days**.
Under the amended policy, the dispute-resolution mechanism incorporated into the agreements and related arrangements will involve Pakistani institutions and be governed by **Pakistani law**.
Refineries that fail to sign the upgrade agreements, as well as those that have not implemented previously signed agreements, will face penalties, according to the Cabinet decision.
The government has retained the existing **deemed duty** mechanism, subject to proposed amendments. The **Inland Freight Equalisation Margin (IFEM)** mechanism will also continue for the time being, although authorities intend to replace it with an appropriate framework by separating various adjustments, including those related to sales tax.
A major institutional change under the revised policy is the transfer of responsibility for signing and implementing refinery upgrade projects from the **Oil and Gas Regulatory Authority (OGRA)** to the **Petroleum Division**.
OGRA will retain its statutory regulatory functions, while non-regulatory responsibilities envisaged under the original 2023 policy will be assigned to the Petroleum Division or handled through alternative institutional arrangements.
The government has also asked the **State Bank of Pakistan (SBP)** to consider developing a policy allowing refineries to retain foreign exchange, subject to consideration by the **Economic Coordination Committee (ECC)**.
Meanwhile, the Petroleum Division has been tasked with formulating a policy to promote the establishment of a **naphtha cracker plant** and ensuring effective implementation of the amended brownfield policy in coordination with relevant ministries, organisations and stakeholders.
The government also plans to promote the revised refining policy at international forums to attract foreign investment into Pakistan’s refining sector. Roadshows are planned in **Saudi Arabia, Qatar, Oman, Kuwait and other Middle Eastern countries**, as well as **Azerbaijan and Türkiye**.
Story by Zafar Bhutta
