Pakistan's four major oil refineries have strongly opposed the government's proposal to retrospectively reduce the deemed duty on high-speed diesel (HSD), arguing that any such decision would unfairly penalize the industry for delays caused by the government's failure to implement the Refinery Upgradation Policy 2023.

In a joint representation submitted to the Petroleum Division, Attock Refinery Limited (ARL), National Refinery Limited (NRL), Pakistan Refinery Limited (PRL), and Cnergyico PK Limited (CPL) maintained that they fulfilled all obligations required under the policy within the prescribed timelines, while the execution of the Upgrade Agreements remained pending due to administrative delays.

The refineries opposed the proposal to reduce the deemed duty on HSD from 7.5% to 5% and rejected any retrospective recovery of the 2.5% differential. They argued that the implementation process stalled because the Petroleum Division did not execute the required agreements, despite the companies completing all necessary documentation and approvals.

According to the representation, PRL signed its Upgrade Agreement in November 2023, while NRL, ARL, and Cnergyico submitted their respective agreements and supporting documents during March and April 2024, expressing readiness to proceed with the signing process. However, the companies stated that no formal signing ceremony was arranged by the government.

The refineries also cited official correspondence from the Oil and Gas Regulatory Authority (OGRA), which informed the Petroleum Division that the companies were prepared to execute the agreements and requested timely coordination to complete the process. They argued that these records clearly demonstrate the delays were administrative rather than the result of any failure on the part of the refining industry.

The companies further noted that the Finance Act 2024 significantly altered the fiscal assumptions underpinning the refinery upgrade policy by changing the tax treatment of petroleum products, requiring stakeholders to reassess the implementation framework before proceeding with major investment commitments.

Despite these developments, the refineries reiterated their commitment to implementing the modernization projects envisioned under the Refinery Upgradation Policy and highlighted that NRL has already commenced production of Euro-V compliant high-speed diesel, demonstrating continued investment in cleaner fuel standards.

The industry also challenged the perception that domestic refineries continue to receive excessive tariff protection. It argued that the Tariff Protection Formula has been progressively reduced over the years, with the deemed duty on HSD already lowered from 10% to 7.5%, while similar protection for other petroleum products was withdrawn years ago.

The refineries warned that retrospective policy changes could undermine investor confidence, delay future upgrading projects, and weaken Pakistan's long-term energy security by discouraging investment in domestic refining capacity.