Pakistan's long-delayed refinery overhaul is facing another setback, with upgrade agreements still unsigned and notified nearly a month after the amended policy was approved, potentially costing the country about $1.5 billion a year in additional petroleum imports while refineries continue to surrender millions of rupees daily in deemed duty. The upgrade agreements were widely expected to be signed with Inter State Gas Systems (ISGS) by the end of August, but the process remains stuck in government formalities, raising fresh concerns over Islamabad's ability to execute a policy that has been in the works since 2019.

The Brownfield Refineries Upgradation Policy was first approved in August 2023, amended in February 2024, revised by the Cabinet Committee on Energy (CCoE) on July 28, 2026, and finally approved by the Federal Cabinet in August. Adding to the delays, the policy itself has yet to be formally notified, reportedly because of an oversight in recording the Cabinet decision. Industry estimates put the cost of each year of delay at about $1.5 billion in foreign exchange, largely because Pakistan must import refined petroleum products that modernized domestic refineries could otherwise produce.

Adil Khattak, CEO of Attock Refinery Limited (ARL) and Chairperson of OICCI's Energy Committee, expressed disappointment over the continued delay in signing the Upgradation Agreements despite assurances by concerned officials. The delay is directly hitting refiners as they must surrender 2.5 per cent of deemed duty on diesel for every day the agreements remain unsigned. For Attock Refinery and National Refinery Ltd., the cost is estimated at about Rs7.5 million and Rs10 million a day, respectively.

Under the original Brownfield Refining policy, agreements were to be signed with the Oil and Gas Regulatory Authority (Ogra). The amended framework shifted responsibility to Inter State Gas Systems (ISGS), which requires input or approvals from the Directorate General of Oil and the Law Division, adding another layer to the process. Refineries have approved the final Upgradation Agreement draft with ISGS and are awaiting completion of remaining government formalities.