ISLAMABAD: The Petroleum Division has finalised the plant upgrade agreement for Pakistan’s existing refineries and submitted it to the Economic Coordination Committee (ECC) for approval, paving the way for implementation of the amended Pakistan Oil Refining Policy for Upgradation of Existing/Brownfield Refineries, 2023.
The agreement was finalised after consultations among the Petroleum Division, Law and Justice Division, Oil and Gas Regulatory Authority (Ogra), Special Investment Facilitation Council (SIFC), Finance Division, Inter State Gas Systems (ISGS), refineries and other stakeholders.
The Petroleum Division has sought the ECC’s approval to operationalise the amended refinery policy, which was approved by the Cabinet Committee on Energy (CCOE) on July 28, 2026, and subsequently ratified by the federal cabinet on August 10.
“To operationalise the Pakistan Oil Refining Policy for Upgradation of Existing/Brownfield Refineries, 2023 (as amended in August 2026), in a timely manner, the draft upgrade agreement has been submitted for consideration and approval of the ECC,” an official said.
Under the amended policy, refineries seeking government incentives are required to enter into upgrade agreements with the Petroleum Division or its designated implementation entity.
ISGS designated as implementation entity
Following approval of the amended policy, the government designated Inter State Gas Systems (ISGS) as the implementation entity on behalf of the Petroleum Division.
ISGS will be responsible for executing upgrade agreements, managing refinery upgradation accounts, monitoring projects, appointing technical consultants and auditors, and administering incentive payments from the designated accounts.
The government had also constituted a committee comprising the petroleum secretary, law and justice secretary, Ogra chairman and SIFC to finalise the upgrade agreement.
The committee held consultations to update the earlier agreement finalised between Ogra and the refineries and align it with the amended policy and revised implementation arrangements. Officials from the Finance Division, National Coordination and Management Council (NCMC), SIFC, ISGS and refineries also participated, while law firm Orr Dignam provided legal assistance.
The final agreement establishes a uniform contractual framework for refinery upgrade projects, setting out the rights and obligations of the parties as well as procedures for project monitoring, management of refinery upgradation accounts, verification of project milestones and disbursement of incentives.
Law Division clears agreement
The Petroleum Division shared the agreement with the Law and Justice Division and Finance Division for formal comments on September 1.
The Law and Justice Division subsequently declared the agreement to be “in order and aligned with the refining policy”, according to the summary submitted to the ECC.
The Finance Division also provided its comments, which were reviewed alongside counter-comments before the agreement was forwarded to the ECC.
Officials said ECC approval would remove a key procedural hurdle and enable the government and participating refineries to proceed with execution of their respective upgrade arrangements.
Focus on cleaner fuels, lower furnace oil output
The refinery upgrade programme is aimed at modernising Pakistan’s ageing refining infrastructure and encouraging existing refineries to undertake major investments.
The projects are expected to enable local refineries to produce environmentally cleaner Euro-V petroleum products, substantially reduce furnace oil production and improve overall refinery configuration and efficiency.
The government amended the refinery policy to provide a framework for incentivising these investments, with the broader objective of improving Pakistan’s domestic petroleum product mix and reducing reliance on imports of higher-quality fuels.
The ECC was informed that the agreement had already been finalised through an extensive consultative process and therefore was not circulated for further comments.
Approval by the ECC will allow the Petroleum Division to move forward with the contractual framework and bring the amended refinery upgrade policy closer to full implementation.
Story by Zafar Bhutta
