CCoE to meet today on Oil Refining Policy Amendments

July 28, 2026 (MLN): The Cabinet Committee on Energy (CCoE) is scheduled to meet today at 9:30 a.m. at the Prime Minister's House, with Prime Minister Shehbaz Sharif in the chair, to deliberate proposed amendments to the Pakistan Oil Refining Policy for Upgradation of Existing/Brownfield Refineries, 2023.

According to a notification issued by the Cabinet Division, the Petroleum Division has placed a single substantive agenda item before the committee: amendments to the refining policy governing the country's existing refineries.

The proposed changes are being closely watched by Pakistan's oil refining industry, which has long sought greater policy clarity on investment incentives, deemed duty mechanisms, and tariff protection to support multi-billion-rupee upgrades aimed at producing Euro-V compliant fuels.

Any proposal approved by the CCoE is expected to be forwarded to the federal cabinet for final consideration.

The outcome could have significant implications for Pakistan's downstream energy sector, particularly listed refining companies awaiting policy certainty before proceeding with major capital expenditure plans.

At the heart of the discussions is a proposal to reduce deemed duty protection from 7.5% to 5%, a move that has sparked strong concerns across the refining sector.

While the industry has indicated its willingness to engage with the government on future policy changes, refiners argue that applying the reduction retrospectively would undermine commitments made under the 2023 policy and weaken investor confidence.

Industry representatives maintain that delays in executing the Upgrade Agreements were not caused by the refineries. According to sources, all refineries had finalized and accepted the draft agreements in 2024 and were awaiting the government's scheduling of the formal signing ceremony.

They contend that altering agreed incentives after prolonged administrative delays would materially affect the commercial viability of planned upgrade projects.

The refining industry has also emphasized that the 7.5% tariff protection framework has remained in place for more than two decades, arguing that maintaining policy consistency is essential for attracting long-term capital into Pakistan's energy infrastructure.

The policy review has gained added urgency following changes introduced through the Finance Act 2024, which shifted petroleum products from the zero-rated to the exempt sales tax regime.

The move significantly increased unrecoverable input tax costs for refineries, affecting project economics and slowing implementation of refinery upgrade plans. The Petroleum Division has previously acknowledged that these tax changes created fresh financial challenges for investors.

Beyond fiscal incentives, the CCoE is also expected to deliberate on the institutional framework for implementing the policy.

The Petroleum Division has proposed forming a committee comprising the Secretary Petroleum, Secretary Law, the Chairman of the Oil and Gas Regulatory Authority (OGRA), and a representative of the Special Investment Facilitation Council (SIFC) to finalize the template for the Upgrade Agreements.

However, sources indicate that OGRA has expressed reservations about becoming a signatory to the agreements, maintaining that its statutory role should remain that of an independent regulator rather than a contractual party. Resolving this issue will be crucial to moving the implementation process forward.

Market participants are closely watching today's meeting, as its outcome is expected to determine whether Pakistan's refining sector can finally move ahead with long-awaited modernization investments.

A favorable decision would pave the way for billions of dollars in capital expenditure to upgrade aging refining facilities, improve fuel quality to Euro-V standards, reduce furnace oil production, strengthen energy security, and lower dependence on imported refined petroleum products.

The decision also carries significant implications for Pakistan Stock Exchange-listed refiners, including Attock Refinery Limited (ATRL), National Refinery Limited (NRL), Pakistan Refinery Limited (PRL), and Cnergyico PK Limited (CNERGY), whose expansion plans have largely remained on hold pending policy clarity.

Investors will be looking for clear signals on the future of deemed duty protection, investment incentives, the structure of the Upgrade Agreements, and the government's broader commitment to maintaining a stable and predictable policy framework.

A positive outcome from the CCoE would not only unlock stalled investments but also reinforce confidence in Pakistan's downstream petroleum sector at a time when the country is seeking to attract long-term private capital into strategic industries.

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