Refineries’ Upgradation Hits a Snag
The upgradation of existing oil refineries in Pakistan has hit a snag, with the failure of the regulator to sign implementation agreements on time.
The Petroleum Division seeks six months extension in deadlines of signing agreements.
As of the April 22, 2024 deadline, three refineries – Attock Refinery Ltd, National Refinery Ltd, and Pakistan Refinery Ltd – had consented to sign the agreements, while PARCO and Cnergyico required more time. However, the Petroleum Division neither arranged signings with the willing refineries nor extended the deadline promptly to accommodate requests from PARCO.
According to report, the Cabinet Committee on Energy (CCOE) approved amendments to the Refining Policy, aiming to upgrade refineries to produce environmentally friendly Euro-V fuels and decrease the production of Furnace Oil.
Under the amended policy, refineries are incentivized to upgrade with additional incentives for high-speed diesel (HSD) and motor spirit (MS) production. However, to avail these incentives, refineries must sign upgrade agreements, open an escrow account with OGRA, and provide a bank guarantee within 60 days of the policy notification.
While ARL, NRL, and PRL have expressed readiness to sign agreements, PARCO and Cnergyico – contributing over 50% of the country’s refining output – are yet to finalize theirs. PARCO is updating its feasibility study, and CPL is negotiating a settlement agreement with the government for outstanding petroleum levy payments, processes that may take months.
In light of these delays, the Petroleum Division has proposed a six-month extension to the CCOE, affecting the Policy and associated deadlines.
