Islamabad: The federal government has decided to impose financial penalties on oil refineries that fail to execute Upgradation Agreements (UAs) with the Ministry of Energy (Petroleum Division) by October 1 of this year. The agreements are expected to bring USD 6 billion in investment into Pakistan’s refining sector, much of it expected from Saudi Arabia.

According to sources in the Petroleum Division, the decision was taken by the cabinet during a recent meeting while considering the Cabinet Committee on Energy (CCoE) decision report on Amendments to Pakistan Oil Refining Policy for Upgradation of Existing Brownfield Refineries 2023.

During the discussion, the petroleum division apprised the cabinet that the key objectives of the amended oil refining policy were to produce Euro-V compliant petrol and diesel, enhance petrol and diesel production capacity, and minimise furnace oil and other lower value products.

The cabinet was told that the upgrading refineries was expected to generate annual foreign exchange savings of approximately USD 1 billion. The amended policy could help attract foreign investment into Pakistan’s refining sector, particularly as Saudi Arabia had already expressed interest in investing there.

The agreements will bring Pak Arab Refinery Limited, Pakistan Refinery Limited, National Refinery Limited, Cnergyico and Attock Refinery Limited under the policy. The committee was told that The management of all five refineries said they were ready to sign agreements under the policy by early next month.

The agreements are expected to bring USD 6 billion in investment into Pakistan’s refining sector.