Cabinet Committee on Energy Approves Amendments to Refineries Policy 2023

The Cabinet Committee on Energy (CCoE) passed amendments in Refineries Policy 2023 for existing refineries to undertake large-scale upgradation projects.

Following extensive and extended engagement with the government, refineries, and independent advisors, the Policy was updated and approved by the Cabinet Committee on Energy in a meeting chaired by Minister of Energy Muhammad Ali, reported Business Recorder.

The federal cabinet’s approval is pending and expected to transpire soon.

Refineries earlier pointed out issues in effectively implementing their upgrade projects. Subsequently, stakeholders last month decided on the following key recommendations:

• Compensate the shortfall in incremental/CAPEX incentive due to taxation
• 7.5 percent deemed duty on HSD for sustainability shall continue after the 7-year incentive period for 20 years or till deregulation, whichever comes first
• After the completion of six-year period for upgradation, the waiver shall expire and the refineries producing products below Euro V specification will not be entitled to any deemed duty on MS and HSD
• Deemed duty on HSD reduced to 5% for refineries that do not sign the Upgrade Agreement within one month of the date of notification of amendment in the Policy
• A committee to be formed to address anomalies faced during implementation of this Policy

Now pending only federal cabinet approval, the amended upgrade policy will essentially allow refineries to undertake major upgrade projects to increase production of petrol and diesel and reduce production of furnace oil. It will attract $5-6 billion in investment, resulting in cleaner, more environment-friendly fuels and significant savings in valuable foreign exchange.