Pakistan is preparing to finalize a set of oil refinery agreements with five major companies on Thursday, unlocking more than $6 billion in planned investment aimed at upgrading outdated facilities, lifting domestic fuel output, and cutting the country’s dependence on imported petroleum products.
The deals involve Pak-Arab Refinery Ltd. (Parco), Pakistan Refinery Ltd. (PRL), National Refinery Ltd. (NRL), Cnergyico, and Attock Refinery Ltd. (ARL). A senior Petroleum Division official told The News on Tuesday that the agreements are being wrapped up through a series of meetings between the Petroleum Division and Inter-State Gas Systems (ISGS).
“The signing parties are ready, and most probably these will be inked on Thursday,” the official said.
Oversight Shifts to ISGS
Under the new arrangement, the government has authorized ISGS to sign the agreements and manage their rollout, taking over a role originally assigned to the Oil and Gas Regulatory Authority (Ogra). Once upgraded, the refineries will reportedly be capable of processing a broader mix of crude oil, potentially including supplies from Iran and Russia, subject to existing legal restrictions and international sanctions, according to an ISGS official.
Financing Concerns Cloud the Refinery Upgrade Plan
Despite the progress, industry insiders caution that the ambitious refinery investment plan could stall at the paperwork stage if changes to the incentive structure make the projects harder to finance. Sources within the sector told The News that shifting from jointly managed escrow accounts to accounts controlled solely by the government could weaken investor confidence and complicate efforts to reach financial close.
According to industry sources, simply getting companies to sign on under the Brownfield Refinery Policy shouldn’t be treated as a milestone if the underlying financial terms fail to win over lenders. “Signing an agreement is only the first step. Agreements and MoUs do not bring investment, bankable projects do,” one senior industry source said. “The real achievement will be when lenders accept the structure, financial close is achieved and investment actually starts flowing into refinery upgrades.”
The concern centers on replacing the originally planned joint escrow mechanism, meant to safeguard incentive funds under the refinery policy, with accounts under direct government control. Industry officials argue this isn’t just a procedural tweak. It could reshape how funds are secured, ring-fenced, and accessed, all of which are critical elements of the broader financing framework behind the refinery overhaul.
Given the scale of capital required for refinery modernisation in Pakistan, and the reliance on both domestic and international lenders to fund it, officials say the financial structure matters just as much as the signatures on the agreements themselves.
A Petroleum Division spokesman did not respond to repeated calls or written questions from The News regarding the reported shift in the escrow arrangement for refinery incentives.
