ISLAMABAD: Pakistan’s long-delayed $6 billion refinery upgradation programme has run into fresh turbulence after the Oil and Gas Regulatory Authority (Ogra) proposed reducing the deemed duty incentive on High-Speed Diesel (HSD) from 7.5 percent to 5 percent for refineries that failed to sign their Implementation Agreements (IAs) by the October 22, 2024 deadline, a move the industry says could undermine the financial viability of planned modernisation projects.
The proposal has been incorporated into draft amendments to the Brownfield Refinery Policy 2023, which are currently being finalised before being submitted for formal approval. Under the proposed framework, the remaining 2.5 percent deemed duty, after deduction of applicable taxes, would be transferred to the Inland Freight Equalisation Margin (IFEM) Pool, triggering strong opposition from refiners who view the measure as a retrospective penalty for delays they insist were beyond their control.
A senior Petroleum Division official told The News that the latest proposal has once again placed the country’s refinery upgrade programme in jeopardy despite recent efforts to resolve longstanding taxation issues that had stalled investment decisions.
Concerned by the industry’s reaction, the National Committee for Monitoring and Coordination (NCMC) met in Islamabad on Wednesday and assured refinery representatives that their concerns would be taken into account before the policy amendments are finalised. According to sources, the refineries were also asked to provide assurances that they would sign the pending Implementation Agreements after parliament approves the Finance Bill 2026-27.
