Govt to penalise refineries failing to sign UAs by Oct 1

The federal government of Pakistan has announced plans to penalise oil refineries that do not sign Upgradation Agreements (UAs) with the Ministry of Energy by October 1, 2026. This decision was made during a recent meeting of the Federal Cabinet, which considered the Cabinet Committee on Energy's (CCoE) decision on amendments to the Pakistan Oil Refining Policy for Upgradation of Existing Brownfield Refineries, 2023.

The key objectives of the amended policy include producing Euro-V compliant petrol and diesel, increasing production capacity, and minimizing the production of less valuable products like furnace oil. The upgradation of refineries is expected to save Pakistan approximately $1 billion in foreign exchange annually and attract much-needed foreign investment to the refining sector, particularly from Saudi Arabia.

The Petroleum Division clarified that the amendments from the CCoE meeting on July 28, 2026, have been incorporated into the final draft of the amended Pakistan Oil Refining Policy for Upgradation of Existing Brownfield Refineries, 2023. The government has also specified that refineries must sign UAs with the Ministry of Energy instead of the Oil and Gas Regulatory Authority (OGRA), and that any refineries that miss the October 1 deadline will have to pay a deemed duty of over 5 percent on heavy fuel oil (HSD) into the Refinery Upgradation Account until they sign the agreements.

The penalties are designed to ensure that refineries are compliant with the policy and to attract investment to the country's refining sector.