The federal government has decided to move responsibility for signing and monitoring brownfield refinery upgrade agreements away from the Oil and Gas Regulatory Authority (OGRA) and place it with the Petroleum Division, Petroleum Minister Ali Pervaiz Malik said.
Under the revised arrangement, the agreements will now be signed directly with the Petroleum Division, while the Directorate General Oil will be responsible for overseeing their implementation.
The Petroleum Secretary is currently leading the preparation of the agreements, which are expected to be signed once finalized.
Fund Monitoring Mechanism Also Revised
The government has also revised how it plans to monitor funds available under the refinery incentive package. Rather than setting up a separate escrow account as originally proposed, the Directorate General Oil will now monitor how the funds are used.
A team of chartered accountants from a state-owned company will also be appointed to oversee fund utilization and ensure compliance with the agreed mechanism.
Why the Shift From OGRA
The change updates the implementation framework laid out under the recently amended brownfield refinery policy, which had originally assigned OGRA the task of signing and monitoring the agreements.
According to officials, the earlier arrangement raised questions since policymaking and implementation responsibilities typically sit with the federal government, whereas OGRA’s mandate is centered on regulating the oil and gas sector rather than administering agreements.
The brownfield refinery policy, approved by the Cabinet Committee on Energy, had set a 60-day deadline for the government to finalize agreements with refineries.
Officials have flagged concerns over whether shifting responsibility from OGRA to the Petroleum Division will require a further amendment to the policy itself.
Refineries Push for Faster Implementation
Refineries have reportedly written to the Petroleum Secretary signaling their readiness to sign the agreements while raising concerns about delays in the process moving forward.
They are also seeking clarity on a 2.5 percentage point reduction in deemed duty that applies to refineries that missed the extended October 2024 deadline to sign upgrade agreements.
The broader policy aims to encourage existing refineries to invest in upgrades that would allow them to produce cleaner fuels and reduce Pakistan’s dependence on imported petroleum products.
Officials note that any further delay in finalizing the agreements could affect investment decisions and planned refinery upgrade projects.
