A refinery approval in Dhabeji, a Sindh industrial zone few Pakistanis could point to on a map, is now the clearest test of whether China-Pakistan economic cooperation can work without Beijing’s government financing behind it.
The CPEC Secretariat has endorsed the proposed Falcon Oil Refinery and Storage Complex in Dhabeji, Thatta district. Falcon Oils (Pvt) Limited is developing the project at an estimated cost of $3.5 billion.
It will include a 100,000-barrel-per-day deep-conversion refinery producing Euro-V-compliant fuel, storage for roughly 4 million tonnes of crude and petroleum products, and a 50-megawatt captive power plant. The feasibility study was done by Xinjiang Petroleum Engineering Design Co Ltd, and EPC agreements have been signed with CEEC-GEDI and CGGC, both linked to China Energy Engineering Corporation.
Officials describe it as the largest private-sector commercial investment between the two countries to date, and say it will proceed without sovereign or government financial guarantees from Pakistan. The Board of Investment still needs to present it to CPEC’s Joint Working Cooperation Group before it moves forward.
The endorsement came out of a meeting between Federal Minister for Planning Ahsan Iqbal and a Chinese delegation led by Sun Dongsheng, a senior advisor at China’s Economic Affairs Press. The talks weren’t just about the refinery. They covered a wider push to align CPEC’s “Five Corridors” with Pakistan’s own Uraan Pakistan program, which is built around exports, energy, climate, and industrial capacity.
Iqbal used the meeting to make a specific point: China imports around $2.6 trillion in goods every year, and Pakistan’s share of that is only about $3 billion. That gap, more than any single project, is what officials say phase two of CPEC is supposed to close.
This project matters less for the refinery itself and more for what it signals about CPEC’s survival strategy. Phase one ran on government-to-government debt. Nearly $30 billion went into infrastructure and power plants, much of it financed in ways that added to Pakistan’s debt burden without adding much to its export base. Phase two is supposed to look different: private capital, commercial risk, no sovereign guarantee attached.
Three things back this up. First, the guarantee structure itself. A $3.5 billion project with no government backing is a real departure from how CPEC has operated since 2015. Second, the sourcing of the capital. This is being called private-sector-led, with a Pakistani company as developer and Chinese firms handling engineering and construction, not a state-to-state loan agreement.
Third, the broader pattern around it. Ahsan Iqbal has been explicit that CPEC 2.0 is shifting toward B2B partnerships in agriculture, manufacturing, and mining, with the refinery as the flagship example of that shift actually producing a dollar figure rather than just a talking point.
There’s a fourth signal worth noting. Phase one of CPEC was dominated by power plants, nearly $30 billion worth, and most of that capacity was coal. This project is different in kind, not just in financing structure. It’s a refinery meant to cut Pakistan’s reliance on imported finished fuel, not add generation capacity to a grid that already struggles with circular debt. If Islamabad is serious about the “export deficit” framing Iqbal keeps using, import substitution projects like this one are a more direct route to that goal than another power plant would have been.
Approval by the CPEC Secretariat is not the same as construction. The project still has to clear the Joint Working Cooperation Group, and Pakistan’s track record includes plenty of MoUs that never became working plants.
The 2013 CPEC agreements were worth $46 billion on paper and have taken over a decade to reach roughly $62 billion in actual investment, with plenty of stalled or delayed pieces along the way, including the long-promised ML-1 railway upgrade that China still hasn’t committed to financing.
A refinery with no sovereign guarantee also means Falcon Oils and its Chinese partners carry more of the commercial risk themselves, which could just as easily make them cautious about final investment decisions as it could make Pakistan’s books look cleaner.
Why this matters going forward: Pakistan’s argument to Beijing, and to itself, is that CPEC’s next phase has to build export capacity and industrial competitiveness rather than just add to a debt pile already north of $100 billion in Chinese loans and investment.
Whether Dhabeji becomes a working refinery or another line item in a long list of announced projects will say a lot about whether that pitch is a genuine shift or just a rebrand of the same relationship with a new label attached.
