The Oil & Gas Regulatory Authority (OGRA) will meet local refineries this week to wrap up the upgrade agreement and the escrow account arrangement under the new refining policy.
These agreements are required to be completed within three months of the notification of the policy issued on August 17, 2023. Therefore, just three weeks remain for the regulator and meetings have been arranged to finalize these agreements so that local refineries can proceed with their upgrade plans, according to a national daily.
Approved by the previous government, the policy requires local refineries and OGRA to open the necessary escrow account within three months.
The incremental incentive will be deposited in the IFEM till the account is opened, while new and imported equipment and supplies for the upgrade will not be subject to certain taxes.
In order to qualify for these incentives, a refinery must submit the equipment specifics to the Federal Board of Revenue for approval while it must also enter a legally binding upgrade agreement with OGRA. The completion of such technicalities is contingent on progress in meetings scheduled by the regulator with the refining sector this week.
When implemented, the agreements would allow local refineries to invest up to $4.5 billion in upgrades to enable them to produce Euro-V specification fuels and phase out furnace oil. The regulator would oversee the fund utilization process in accordance with their work plan, which would be verified by one of the top four audit firms assigned to the project.
