Refining breakthrough clears way for $6bn upgrades

July 28, 2026 (MLN): Pakistan's oil refining industry welcomed the government's approval of amendments to the Oil Refining Policy 2023 on Tuesday, calling it a watershed moment that ends years of regulatory uncertainty and paves the way for up to $6 billion in long-delayed investment to modernize the country's refining sector.

In a statement issued after the Cabinet Committee on Energy (CCoE), chaired by Prime Minister Shehbaz Sharif, approved the revised framework, Attock Refinery Ltd Chief Executive Officer Adil Khattak said the decision addressed key concerns raised by refiners that had threatened the commercial viability of planned upgrade projects.

"The amended Oil Refining Policy was finally approved today after taking into consideration the genuine concerns of the refineries on issues that would otherwise have rendered the proposed upgradation projects unviable," Adil Khattak said.

The revised framework marks the latest milestone in a policy process that has stretched over six years.

The original policy was notified in August 2023 and amended in February 2024 before undergoing another round of revisions following extensive consultations among the government, local refineries and independent financial and legal advisers.

Adil Khattak said the prolonged delays had imposed a heavy economic cost on Pakistan, estimating that every year of deferred refinery modernization resulted in losses of between $1.5 billion and $2 billion through continued dependence on imported refined petroleum products and missed foreign exchange savings.

The policy is expected to trigger refinery upgrades worth $5 billion to $6 billion, enabling domestic plants to produce Euro-V compliant fuels, increase gasoline and diesel output, and significantly reduce furnace oil production.

Pakistan's existing refineries continue to generate relatively large volumes of furnace oil, even as domestic demand has declined sharply because of structural changes in the country's electricity generation mix.

According to Adil Khattak, excess furnace oil production has frequently created storage constraints that forced refineries to reduce operating rates.

The modernization program is expected to improve the product slate by increasing production of higher-value transportation fuels while reducing lower-demand furnace oil, strengthening domestic fuel security and lowering reliance on imported petroleum products.

Adil Khattak described the approval as one of the government's most significant policy achievements for the energy sector, saying the framework would finally allow refinery investment plans that had remained stalled for years to move forward.

Although he noted that some refiners remain disadvantaged under certain provisions of the amended policy because of delays beyond their control, he said the broader national benefits outweighed those concerns.

"Though the amended policy unfairly penalises some of the refineries for the delay, it is still an occasion to celebrate in the larger interests of the country," he said.

Adil Khattak also praised Petroleum Minister Ali Pervaiz Malik and officials of the Petroleum Division for securing consensus on the revised framework after prolonged negotiations with industry stakeholders and government institutions.

As Chairperson of the Energy Committee of the Overseas Investors Chamber of Commerce and Industry (OICCI), Adil Khattak said successful implementation of the policy would not only improve Pakistan's fuel quality and environmental standards but also deliver substantial foreign exchange savings by replacing imported refined products with increased domestic production.

Industry executives now expect the policy approval to revive one of Pakistan's largest planned private-sector industrial investment programs, ending years of uncertainty that repeatedly delayed critical refinery modernization projects.

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