The government has taken steps to revive nearly $6 billion in planned refinery investments by addressing key tax and policy constraints that have delayed major upgrade projects in Pakistan’s oil refining sector.
A high-level meeting chaired by Finance Minister Muhammad Aurangzeb signaled renewed progress on the long-pending Brownfield Refinery Policy. Officials discussed proposals to exempt machinery imports from sales tax and introduce policy safeguards aimed at restoring investor confidence in refinery modernization initiatives.
The meeting was attended by Petroleum Minister Ali Pervaiz Malik, senior officials from the Finance Division, Petroleum Division, Federal Board of Revenue, Oil and Gas Regulatory Authority (OGRA), and representatives of oil refineries. Participants reviewed issues arising after changes introduced through the Finance Act 2024, particularly the shift of petroleum products from zero-rated to sales tax-exempt status.
Industry stakeholders highlighted that the revised tax structure had disrupted the financial viability of refinery upgrade projects, as input sales tax could no longer be fully adjusted against output tax liabilities. Refineries warned that the additional burden was increasing project costs and creating uncertainty for lenders and investors involved in multibillion-dollar modernization plans.
Officials indicated that the government is now considering a stability clause in agreements between OGRA and refineries to ensure policy consistency during project execution. Another meeting, scheduled for Monday under the petroleum minister, is expected to finalize proposals before submission to the Economic Coordination Committee for approval.
Sources said the Prime Minister has already directed relevant ministries to remove bottlenecks and fast-track refinery upgrade projects.
The government considers refinery modernization essential for strengthening long-term energy security, producing cleaner Euro V-compliant fuels, reducing furnace oil output, and lowering dependence on imported petroleum products.
Industry participants welcomed the renewed policy engagement, stating that stable fiscal and regulatory frameworks are critical for attracting financing and sustaining investor confidence in long-term energy projects. Officials also noted that multiple proposals are under review to improve cash flow stability and protect approved investments from sudden policy changes.
If implemented, the Brownfield Refinery Policy is expected to modernize Pakistan’s downstream petroleum sector, improve refining efficiency, enhance environmental standards, and attract fresh investment into energy infrastructure.
