PM Shehbaz approves amendments to Pakistan Oil Refining Policy 2023, orders swift implementation

Approving the proposed amendments to the Pakistan Oil Refining Policy, 2023, Prime Minister Shehbaz Sharif said on Tuesday that effective and timely implementation of the new policy must be ensured, and no negligence or delay in this regard will be tolerated under any circumstances.

He said this while chairing a meeting of the Cabinet Committee on Energy, the Prime Minister’s Office (PMO) said in a statement.

The PM directed the relevant ministries and institutions to expedite the reform process while maintaining close contact with all stakeholders.

The Pakistan Oil Refining Policy, 2023, was developed by the Ministry of Energy (Petroleum Division) to address critical issues within the country’s strategic oil refining sector, aiming to modernise existing facilities and attract new investments.

Meanwhile, the meeting was given a detailed briefing on the progress of upgradation of oil refineries in the country, reforms in the energy sector, and implementation of the policy.

“The meeting was informed that the amendments made to the Pakistan Oil Refining Policy 2023 regarding brownfield refineries aim to ensure the production of environment-friendly petrol and diesel compliant with Euro-V standards and to reduce furnace oil and low-quality petroleum products,” the PMO said.

“Upgradation of oil refineries is an important need of the time and is a key pillar of Pakistan’s comprehensive energy security system.

Refineries aligned with modern requirements will not only better meet the country’s energy needs but will also prove helpful in reducing dependence on imported fuel and providing environment-friendly fuel,” the PM was quoted as saying.

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The premier also directed that reforms be introduced to improve OGRA’s performance and meet market needs so that competition, transparency, and investment in the energy sector are promoted.

The PM further directed that strategic reserves of petroleum products in the country be increased.

“The briefing stated that the upgradation of existing refineries is inevitable to increase their production capacity.

The production of fuel meeting Euro-4 and Euro-5 standards is essential for fulfilling Pakistan’s international environmental commitments, reducing air pollution, and providing better-quality fuel to the public.”

During the meeting, PM Shehbaz said that the government will continue to take all possible measures to introduce sustainable reforms in the energy sector, promote modern technology, and provide a conducive environment for investment.

He directed that roadshows be held in Qatar, Saudi Arabia, and other Gulf countries to promote the amended Pakistan Oil Refining Policy 2023 regarding brownfield refineries.

Positive for refinery sector

Market analysts termed the development a positive for the country’s critical refinery sector.

“We view this development as positive for listed refineries, particularly PRL, NRL and ATRL, as it materially improves the visibility of long-delayed upgrade projects aimed at increasing Euro-V compliant fuel production and enhancing product yields,” said Topline Securities in a note.

The brokerage house noted that the policy had effectively remained in limbo after the Finance Act 2024 shifted major petroleum products from the zero-rated to the exempt sales tax regime, significantly weakening project economics by preventing refineries from claiming input sales tax on capital expenditure.

“While the Finance Act 2026 partially addressed this issue by exempting imported plant and machinery from sales tax, today’s amendments provide the final policy clarity required for refineries to proceed with upgrade agreements,” it added.