26/12/2025
Pakistan’s largest oil refineries sit at the centre of a deepening contradiction. While the country imports 70% of petrol and 30% of diesel, domestic refineries operate at barely two-thirds capacity, locked into outdated technology and policy indecision that now threatens energy security.
The refining sector’s five major players control 20 million tons of annual capacity, yet financial health has deteriorated sharply. Gross margins collapsed from 5.9% to 2.2% in FY25, while profits fell 84%, exposing how obsolete infrastructure is eroding viability across the industry.
Most refineries remain hydro-skimming facilities, producing excessive furnace oil that has little domestic demand. Lacking modern conversion units, they import high-quality petrol and diesel instead. The result is inefficiency, rising imports, and fuels stuck at Euro II and III standards.
Upgrades are not optional. Modernisation would enable Euro-V fuels, improve air quality, cut furnace oil output by 80%, and potentially save billions in foreign exchange. Yet under regulated pricing, refineries cannot recover upgrade costs, making private financing nearly impossible.
The Brownfield Refinery Policy promised a solution, with $6 billion in planned investments and partial government support. But sales tax exemptions, IMF resistance, and unresolved levies have stalled implementation. Two years on, only one refinery has signed, and even that project failed to attract investors.
Pakistan’s refinery crisis is no longer technical; it is political. Everyone agrees on the destination but remains stuck on the route. Whether policy paralysis breaks or deepens will decide energy security, trade balances, and industrial credibility. The full story explains what is holding it back.
Read: https://profit.pakistantoday.com.pk/2025/12/22/pakistans-refinery-crisis-is-a-six-billion-dollar-gamble-on-energy-security/
