The government has hinted that major reforms will be introduced for the petroleum refining sector in the upcoming budget so that the $6 billion upgrade project, which has been stalled for many years, can be reactivated.
According to officials, the implementation of the Pakistan Oil Refining Policy 2023 was mainly stalled due to the IMF deal and the sales tax dispute, which affected new investments in the local refinery sector.
According to sources, Federal Finance Minister Muhammad Aurangzeb has assured refinery officials that reform measures will be included in the budget 2026-27 and the matter will also be raised with the IMF.
Petroleum Division officials say that due to the lack of local refinery upgradation, Pakistan is relying on expensive imported petroleum products, while modern refining projects can not only reduce import bills but also enable the production of environmentally friendly fuels.
According to reports, the removal of customs duty on high-speed diesel and sales tax exemption on petroleum products in the last budget had affected the economic viability of refinery projects.
Refineries have demanded that the government provide clear guarantees of policy stability, compensation for sales tax losses, and foreign exchange facilities during the projects so that investment can be restored.
Petroleum Minister Ali Pervez Malik said that the current situation in the region has further increased the importance of energy security and Pakistan urgently needs to increase local refining capacity.