ISLAMABAD: The government has planned to fully deregulate its petroleum products market by 2027 after the country’s oil refineries make necessary technical upgradation in 2026, according to the draft of the upcoming Pakistan Oil Refining Policy.

The Oil and Gas Regulatory Authority (Ogra) is in the process of consultation with oil marketing companies and refineries.

Petroleum product rates are currently determined by the government which fortnightly revisits them to keep them consistent with the price fluctuations in the international market.

Full deregulation till 2027 will be finalized in consultation with all the stakeholders.

The government plans to offer various incentives, including a 10-year income tax holiday to oil refineries in the country that are willing to upgrade their hardware to produce fuel with Euro-V specifications.

The Euro-V standards require a cut down in the sulfur content to avoid air pollution and improve vehicle efficiency which is mostly affected by low quality fuels.

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Under new policy the government would announce tariff protection for six years for the refineries that choose to upgrade. The minimum financing for the upgradation of hardware would roughly be around $4-5 billion.

According to the draft policy, Pakistani oil refineries are required to complete the upgradation process by December 31, 2026.

The deregulation will allow OMCs to set the prices themselves, based on the quality of fuel, the location and other value-added services.

Copyright Business Recorder, 2022