What happens when a nation’s tax policies choke its own industries, pushing giants to seek refuge in foreign markets? Pakistan’s largest refiner, Cnergyico, finds itself in this very predicament, forced to pivot dramatically as domestic sales crumble under the weight of punitive taxation. With local demand for fuel oil plummeting, the company has turned its gaze outward, ramping up exports to survive. This isn’t just a corporate maneuver—it’s a stark reflection of an industry teetering on the edge, caught between government decisions and global market tides.
The stakes couldn’t be higher for Pakistan’s refining sector, where Cnergyico stands as a bellwether for broader economic struggles. Heavy taxes have slashed domestic profitability, compelling the company to export a staggering 95% of its production since mid-2025. This shift, while a lifeline, underscores a critical tension: how can an industry balance short-term survival with long-term sustainability in a policy landscape that seems stacked against it? The story of this refiner offers a window into the challenges and choices facing Pakistan’s energy sector today.
A Refinery Under Siege: Taxation’s Toll on Domestic Sales
Pakistan’s refining industry is grappling with a harsh reality—government tax policies have become an albatross around its neck. In mid-2025, an additional tax burden of approximately 40% was layered atop an existing 18% consumption tax, effectively pricing local refiners out of their home market. For Cnergyico, this has meant a drastic reduction in domestic sales, as fuel oil—a key product—becomes unaffordable for local buyers.
Beyond taxation, the decline in fuel oil-based power generation has compounded the crisis. With Pakistan increasingly adopting solar and nuclear energy, alongside reduced overall power demand, the need for traditional fuel oil has withered. This perfect storm of policy and market shifts has left refiners scrambling to redefine their role in a rapidly changing energy landscape, pushing companies like Cnergyico to seek alternative avenues for revenue.
Export Surge: A Lifeline in International Waters
Faced with a shrinking domestic market, Cnergyico has found salvation in exports, redirecting its focus to global demand. Since July 2025, the company has exported 95% of its production, equating to roughly 80,000 tons, a sharp rise from just 55% in the prior fiscal year. Projections indicate a robust 35% to 40% increase in fuel oil exports by June 2027, targeting an annual volume of 333,000 to 346,000 metric tons.
This export boom aligns with a national trend, as Pakistan recorded an all-time high of 242,000 tons of fuel oil exports in August 2025, according to Kpler data. Cnergyico has tapped into markets across southern Europe, Singapore, and the UAE, working through traders to navigate these waters. Yet, the volatility of export revenues, tied to fluctuating fuel oil cracks, introduces a layer of uncertainty to this strategy, highlighting the precarious nature of relying on international markets.
Industry Voices: Navigating Uncharted Challenges
Insights from industry leaders paint a vivid picture of the balancing act at play. At a prominent energy conference in 2025, Cnergyico’s Vice Chairman, Usama Qureshi, emphasized the critical role of fuel oil, which accounts for 10% to 15% of the company’s annual revenue. His candid remarks revealed the stark choice facing the refiner: adapt to current constraints or risk collapse in a market that offers little domestic respite.
Qureshi’s perspective resonates with broader industry sentiments, where adaptation is no longer a choice but a mandate. The shift to exports, while necessary, is seen as a stopgap measure by many analysts who stress the importance of aligning with evolving energy demands. This viewpoint underscores a deeper truth—survival hinges on agility, especially when national policies create more hurdles than opportunities for growth.
Modernization Efforts: Building for a Cleaner Future
Cnergyico isn’t content to rely solely on exports; strategic investments in modernization signal a forward-thinking approach. The company is actively upgrading its refinery complex to reduce fuel oil output while increasing production of cleaner fuels like diesel and gasoline, aligning with Pakistan’s push for environmentally friendly energy solutions. Such efforts aim to recapture a foothold in the domestic market over time.
A notable move includes importing low-sulfur “sweet” crude, with a historic purchase from the United States in 2025, diverging from the traditional high-sulfur crude sourced from the Middle East. Additionally, plans to establish fuel oil cracking facilities are underway to boost gasoline production. These initiatives reflect a dual focus on profitability and sustainability, offering a blueprint for navigating market setbacks through innovation.
Strategic Crossroads: Balancing Exports and Domestic Goals
The dynamics between domestic and export markets reveal a complex challenge for Cnergyico. While domestic sales of fuel oil historically offered higher margins, the current tax regime has rendered them unviable, forcing reliance on exports where revenues fluctuate with global prices. This uncertainty poses risks, as international demand and pricing remain unpredictable compared to the stability once found at home.
Yet, the company’s strategy extends beyond mere survival in foreign markets. By targeting diverse regions and investing in refinery upgrades, Cnergyico aims to build resilience against both policy-driven domestic losses and global market swings. This calculated approach highlights a broader lesson for the industry: adaptability, paired with long-term vision, may be the only path to enduring success in such turbulent times.
Reflecting on a Pivotal Moment
Looking back, Cnergyico’s journey through 2025 illustrated a profound struggle within Pakistan’s refining sector, as punitive taxes forced a dramatic shift toward exports. The company’s response—ramping up international sales while modernizing operations—mirrored the broader tensions between immediate economic pressures and future-focused goals. Each decision reflected a fight to stay afloat amid policies that stifled domestic growth.
The path forward demanded more than temporary fixes; it called for sustained investment in cleaner technologies and strategic market diversification. Industry stakeholders needed to advocate for balanced policies that supported local refiners without sacrificing environmental progress. Only through such collaboration could Pakistan’s energy sector have hoped to transform challenges into opportunities, ensuring stability for giants like Cnergyico in an ever-shifting landscape.
