ISLAMABAD: Barely days after the government removed key policy hurdles to unlock nearly $6 billion in refinery upgrade investments, the country’s refineries have urged the Petroleum Division to immediately share the revised drafts of the Upgrade and Escrow Agreements, warning that any further delay in signing the contracts will prolong the retrospective financial penalty imposed on them.
In a letter dated July 30, 2026, addressed to the Secretary Petroleum, Attock Refinery Limited (ARL) welcomed the Cabinet Committee on Energy’s (CCoE) approval of the amended Brownfield Refineries Upgradation Policy but objected to the retrospective penalty imposed on refineries that had not formally signed the Upgrade Agreements by October 22, 2024.
The company argued that it, along with National Refinery Limited (NRL), had fulfilled all obligations well before the deadline. According to ARL, both companies had obtained board approvals, initialled the draft Upgrade Agreements with the Oil and Gas Regulatory Authority (Ogra), and arranged the required bank guarantees. However, they are now being subjected to the same penalty despite the government’s failure to arrange formal execution of the agreements.
“We still appreciate approval of the amended Brownfield Refineries Upgradation Policy and look forward to initiating our Upgrade Project without further delay,” ARL said in its letter, urging the government to reconsider what it described as an unfair retrospective penalty imposed “for no fault of ours.”
The refinery also requested the petroleum division to immediately circulate the revised drafts of the Upgrade and Escrow Agreements so that the documents could be finalised without any further delay.
“The ball is now in the government’s court. We hope they don’t delay it again for any reason,” ARL Chief Executive Officer Adil Khattak told The News. The request comes at time when the government faces a question: which government entity should execute and oversee the agreements required to implement the amended policy.
Although the amended policy, approved by the CCoE on July 28, 2026, explicitly authorises OGRA to sign the Upgrade and Escrow Agreements with refineries and monitor their implementation, senior government sources told The News that a proposal is under active consideration to transfer these responsibilities to the Petroleum Division.
According to the sources, Ogra argues that the its statutory mandate is limited to regulation and does not extend to signing contractual agreements or supervising their implementation. Sources said the Petroleum Division, in consultation with the Law Division, is examining whether it should instead execute and oversee both agreements.
However, any such change would require another amendment to the Brownfield Refineries Upgradation Policy because the policy approved by the CCoE specifically designates Ogra as the executing authority.
Officials acknowledged that any delay in signing the agreements would also prolong the financial penalty imposed under the amended policy. Refineries that failed to sign the Upgrade Agreements by the extended deadline of October 22, 2024, face a reduction in deemed duty protection on High-Speed Diesel (HSD) from 7.5 percent to 5 percent—a retrospective cut of 2.5 percentage points—even though the agreements themselves have yet to be executed.
Federal Minister for Petroleum Ali Pervaiz Malik did not respond to repeated queries from The News seeking clarification on whether the government had decided to replace Ogra with the Petroleum Division as the authority responsible for signing and monitoring the agreements.
The minister was asked whether the government intended to amend the recently approved policy to reflect the proposed change and when the signing ceremony for the Upgrade and Escrow Agreements would finally take place. He was also asked whether refineries would continue to face the retrospective reduction in deemed duty protection until the agreements are executed. Similarly, Additional Secretary and spokesman for the Petroleum Division Zafar Abbas did not respond to questions sent to him.
