Seven years to reach the starting line

REFINERY UPGRADATION

The signing of the upgradation agreements by Pakistan's refineries on September 24, 2026 marked a historic milestone, not only for the refining sector but for Pakistan's industrial development as a whole. It marked the tangible start of what is arguably the largest coordinated industrial investment programme ever undertaken in the country, involving around $6 billion to be executed over the next five years.

Under a common policy framework and implementation timeframe, the five refineries will undertake major upgradation projects which should fundamentally transform Pakistan's refining infrastructure. The projects will enable production of cleaner Euro-V fuels, substantially reduce furnace oil production, improve the product slate, replace significant quantities of imported petroleum products and strengthen the country's energy security.

The scale of the investment is impressive. But for those of us who have remained involved with this initiative from its inception, the more remarkable story is how long it took Pakistan to reach the starting line. The journey began with the first draft of the Refining Policy in December 2019. After numerous deliberations and iterations, the Brownfield Refinery Upgradation Policy was finally approved in August 2023 and amended in February 2024.

Just when implementation appeared within reach, exemption of petroleum products from sales tax adversely affected refinery economics and rendered the upgradation projects unviable. Almost another two precious years were lost. Following sustained engagement between the refining industry and the government, these issues were eventually addressed through the second amended Policy, paving the way for the signing of the upgradation agreements.

The cost of seven years

Seven years is an extraordinarily long time for a country as dependent upon imported energy as Pakistan to formulate and implement a policy of such strategic importance. The delay has also carried a substantial economic cost. Industry estimates indicate that refinery upgradation could save Pakistan around $1.5 billion annually in foreign exchange. The cumulative opportunity cost of delaying these investments has therefore been enormous.

This journey offers important lessons

For far too long, the strategic importance of domestic refining capacity was inadequately appreciated. Institutional capacity constraints, frequent political and bureaucratic changes, inconsistent policies, compartmentalised decision-making and a lack of cohesion among different arms of government all contributed, in varying degrees, to the inordinate delay. Powerful commercial interests have also been associated with an import-dependent petroleum supply system. It would be naïve to assume that every stakeholder necessarily shares the objective of strengthening domestic refining capacity.

Refining is also about energy security

Recent geopolitical developments have brought into sharp focus what Pakistan's refining industry has emphasised for years: domestic refining capacity is not merely a commercial or industrial consideration; it is a strategic national asset. The recent US-Iran conflict and consequent concerns over international petroleum supply routes reinforced the importance of maintaining strong domestic refining capability. For Pakistan, it is strategically and logistically far more prudent to maintain the capability to source crude oil from diverse suppliers and locations and convert it domestically into the products the economy requires, rather than remain excessively dependent on imports of more expensive finished petroleum products.

Policies ultimately acquire meaning only when they move from files and meeting rooms to investment on the ground. The signing of the agreements was therefore not the culmination of the journey. It marks the start of a much more challenging phase: financing, engineering, procurement, construction and commissioning of highly complex projects within five years

This distinction becomes particularly important during geopolitical crises. Crude oil can be sourced from multiple origins and processed to meet domestic requirements, while dependence on finished products exposes the country more directly to disruptions in international refining capacity, product availability and logistics.

Credit where it is due

While the journey was unnecessarily long, reaching this milestone deserves recognition. The final breakthrough would not have been possible without the passionate, persistent and resilient leadership of Federal Minister for Petroleum Ali Pervaiz Malik, his team in the Petroleum Division and the support of other relevant government departments and institutions. The minister's determination to remove the remaining impediments and translate a long-pending policy into implementation was instrumental in finally bringing the industry to this stage.

Policies ultimately acquire meaning only when they move from files and meeting rooms to investment on the ground. The signing of the agreements was therefore not the culmination of the journey. It marks the start of a much more challenging phase: financing, engineering, procurement, construction and commissioning of highly complex projects within five years.

Seven years to decide, five years to build

There is a sobering contrast here: Pakistan took almost seven years to create the policy framework for investments which the refineries are now required to physically execute within five years. That should give policymakers reason for reflection. The last two years' experience is particularly instructive. The industry identified the adverse impact of the sales tax changes on refinery economics at the outset and proposed practical measures to address the issue -- substantially similar to those eventually incorporated in the amended policy. Had these measures been adopted through timely and coordinated decision-making, much of the subsequent two-year delay could have been avoided.

The purpose of recalling this history is not to apportion blame but to learn from it. Major industrial investments require more than attractive policies. They require policy consistency and continuity, adequate institutional capacity, effective coordination among government institutions and the ability to resolve implementation problems expeditiously.

Pakistan simply cannot afford to spend years resolving issues for which workable solutions are already available. The opportunity cost -- in investment, foreign exchange, employment, technological advancement and energy security -- is simply too high.

Having remained involved in the formulation of the Refinery Policy and witnessed its many ups and downs since December 2019, I fully appreciate the significance of finally reaching this stage. The signing of the Upgradation Agreements has allowed Pakistan to move at last from policy formulation to physical implementation -- from almost seven years of deliberation to around $6 billion of industrial investment.

The challenge now is to ensure that the next five years are spent building rather than debating.

The writer is the CEO of Attock Refinery Limited and the chairman of the Energy Committee of the Overseas Investors Chamber of Commerce and Industry (OICCI).