Refineries Failing to Sign Upgradation Deals by Oct 1 to Face Penalties

Oil refineries risk penalties if they fail to sign upgradation agreements with Pakistan's Ministry of Energy by October 1, 2026. The amended brownfield refinery policy, approved by the Federal Cabinet, mandates deposits of a high deemed duty on high-speed diesel into the Refinery Upgradation Account for refineries that miss the deadline.

The penalty amount increases annually, reaching 5 percent from June 30, 2027. The policy also sets a five-year project completion period, with incentives tied to actual progress. Once signed, refineries have 45 days to finalize agreements with the Petroleum Division, replacing the previous 60-day window. The government aims to unlock around USD 6 billion in investment through the policy, which could generate annual foreign exchange savings of approximately USD 1 billion.