ECC to finalize 2023 Oil Refining Policy Settlement worth hundreds of millions

August 26, 2025 (MLN): The Economic Coordination Committee will deliberate on Tuesday on a comprehensive settlement deed under the country's 2023 Oil Refining Policy. 

This will mark a critical step in the government's ambitious plan to modernize the nation's petroleum infrastructure and reduce import dependency.

The high-stakes Cabinet committee meeting, scheduled for today at the Finance Division in Islamabad, will focus on upgrading existing refineries and attracting brownfield investments that could total hundreds of millions of dollars, as Pakistan seeks to strengthen energy security amid ongoing economic challenges.

Refinery modernization takes center stage

The settlement deed under review represents the government's commitment to transform Pakistan's aging oil refining sector, which has struggled with outdated technology and inefficient operations.

The 2023 Oil Refining Policy aims to incentivize private investment in upgrading existing facilities while establishing new benchmarks for fuel quality and environmental standards.

The move came as Pakistan's fuel import bill continues to strain foreign exchange reserves, with the country spending over $10 billion annually on petroleum products.

Broader energy sector reforms on agenda

Beyond oil refining, the Economic Coordination Committee, chaired by Finance Minister Muhammad Aurangzeb, will tackle several energy-related challenges that collectively represent over $4 billion in economic impact:

Power Consumer Relief: The committee will consider relief measures for electricity consumers affected by captive power transition levies, potentially providing immediate financial relief to industries and households struggling with soaring energy costs.

Strategic Pipeline Infrastructure: A review of tariff determinations for the Machike-Thalian Tarrujabba White Oil Pipeline (MTT-WOP) will address crucial fuel distribution infrastructure and energy security concerns.

State Media Funding: A substantial Rs. 11 billion technical supplementary grant for Pakistan Television Corporation (PTVC) will be evaluated, highlighting fiscal pressures on state-owned enterprises.

The refinery policy settlement could signal a new phase of energy sector privatization and modernization, aligning with Pakistan's broader economic reform agenda under its $3 billion IMF program.

Successful implementation could attract foreign direct investment in the petroleum sector, which has seen limited international interest in recent years.

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