Govt to Take Over Refinery Upgrade Agreements From OGRA

The government has decided to shift responsibility for signing and monitoring brownfield refinery upgrade agreements from the Oil and Gas Regulatory Authority (OGRA) to the Petroleum Division, Petroleum Minister Ali Pervaiz Malik said.

Under the new arrangement, the agreements will be signed with the Petroleum Division, while the Directorate General Oil will oversee their implementation. Petroleum Secretary is currently leading the preparation of the agreements, which are expected to be signed once finalized.

The government has also changed the proposed mechanism for monitoring funds available under the refinery incentive package. Instead of establishing a separate escrow account, the Directorate General Oil will monitor the use of the funds. A team of chartered accountants from a state owned company will also be appointed to oversee fund utilization and compliance with the agreed mechanism.

The change revises the implementation framework under the recently amended brownfield refinery policy, which had assigned OGRA responsibility for signing and monitoring the agreements. Officials said the earlier arrangement had raised questions about OGRA's involvement because policymaking and implementation fall primarily under the federal government, while OGRA's mandate is focused on regulation of the oil and gas sector.

The brownfield refinery policy, approved by the Cabinet Committee on Energy, had set a 60 day deadline for the government to sign the required agreements with refineries. Officials have raised concerns over whether the shift from OGRA to the Petroleum Division will require another amendment to the policy.

Refineries have reportedly written to the Petroleum Secretary expressing readiness to sign the agreements and concerns over delays in implementation.

They are also seeking clarity over a 2.5 percentage point reduction in deemed duty applicable to refineries that failed to sign upgrade agreements by the extended October 2024 deadline.

The policy is intended to encourage existing refineries to invest in upgrades that would enable the production of cleaner fuels and reduce Pakistan's reliance on imported petroleum products. Any further delay in signing the agreements could affect investment decisions and planned refinery projects.

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