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Business Recorder
21-05-2025
- Business
- Business Recorder
CEOs of refineries appreciate resolution of sales tax issue
ISLAMABAD: The Chief Executive Officers (CEOs) of Pakistan's leading oil refineries called on Federal Minister for Petroleum, Ali Pervaiz Malik, on Tuesday, to express their gratitude for the government's decisive action in resolving the long-standing sales tax issue affecting the refining and OMC sectors. The meeting underscored the government's firm commitment to ensuring energy security and facilitating refinery upgrade projects worth over USD 6 billion, which are critical to modernising Pakistan's refining infrastructure. The resolution of the sales tax issue marks a significant milestone in creating a conducive environment for investment and operational efficiency in the oil refining industry. The CEOs lauded the Petroleum minister's proactive approach and the PM's personal efforts/support in addressing key challenges faced by the sector. They reiterated their commitment to advancing refinery upgradation projects in line with the prime minister's vision for enhancing fuel quality, reducing emissions, and promoting clean energy solutions. Speaking on the occasion, Federal Minister Ali Pervaiz Malik emphasised that the government is fully dedicated to fostering a sustainable energy ecosystem. 'The steps to address the sales tax issue reflects our unwavering resolve to support the refining sector, which plays a pivotal role in Pakistan's energy security and economic growth. The refinery upgrades will not only enhance production efficiency but also align with our goal of transitioning toward cleaner and more sustainable energy sources,' he stated. Furthermore, he highlighted that policy consistency is the corner stone for viability of any sector, fostering investor confidence. The refinery upgradation projects, once completed, will significantly improve fuel standards, reduce reliance on imported petroleum products, and contribute to environmental sustainability by producing Euro-V compliant fuels. This initiative is at heart of the government's broader strategy to strengthen the energy sector and ensure long-term economic stability through foreign investments. The delegation included Zahid Mir-CEO Pakistan Refinery Limited, Irtiza Qureshi - MD PARCO, Adil Khattak - CEO Attock Refinery Limited, Amir Abbasi - CEO Cynergico, and Asad Hasan - CEO National Refinery Limited. Copyright Business Recorder, 2025
Business Recorder
21-05-2025
- Business
- Business Recorder
CEOs of refineries appreciate resolution of ST issue
ISLAMABAD: The Chief Executive Officers (CEOs) of Pakistan's leading oil refineries called on Federal Minister for Petroleum, Ali Pervaiz Malik, on Tuesday, to express their gratitude for the government's decisive action in resolving the long-standing sales tax issue affecting the refining and OMC sectors. The meeting underscored the government's firm commitment to ensuring energy security and facilitating refinery upgrade projects worth over USD 6 billion, which are critical to modernising Pakistan's refining infrastructure. The resolution of the sales tax issue marks a significant milestone in creating a conducive environment for investment and operational efficiency in the oil refining industry. The CEOs lauded the Petroleum minister's proactive approach and the PM's personal efforts/support in addressing key challenges faced by the sector. They reiterated their commitment to advancing refinery upgradation projects in line with the prime minister's vision for enhancing fuel quality, reducing emissions, and promoting clean energy solutions. Speaking on the occasion, Federal Minister Ali Pervaiz Malik emphasised that the government is fully dedicated to fostering a sustainable energy ecosystem. 'The steps to address the sales tax issue reflects our unwavering resolve to support the refining sector, which plays a pivotal role in Pakistan's energy security and economic growth. The refinery upgrades will not only enhance production efficiency but also align with our goal of transitioning toward cleaner and more sustainable energy sources,' he stated. Furthermore, he highlighted that policy consistency is the corner stone for viability of any sector, fostering investor confidence. The refinery upgradation projects, once completed, will significantly improve fuel standards, reduce reliance on imported petroleum products, and contribute to environmental sustainability by producing Euro-V compliant fuels. This initiative is at heart of the government's broader strategy to strengthen the energy sector and ensure long-term economic stability through foreign investments. The delegation included Zahid Mir-CEO Pakistan Refinery Limited, Irtiza Qureshi - MD PARCO, Adil Khattak - CEO Attock Refinery Limited, Amir Abbasi - CEO Cynergico, and Asad Hasan - CEO National Refinery Limited. Copyright Business Recorder, 2025
Express Tribune
06-05-2025
- Business
- Express Tribune
Policy delays threaten $5b refinery investments
Listen to article Foreign investors are reluctant to invest in refining sectors, as the government has failed to resolve multiple issues faced by refineries. Delays in the implementation of the Brownfield Refineries Policy 2023 have affected timelines, and sales tax exemptions are another issue that has impacted the refineries' projects of upgradation. Sources told Express Tribune that foreign investors have conveyed to refineries that they are not prepared to invest in the upgradation of projects unless the government resolves their issues. Quoting an example of Pakistan Refinery Limited (PRL), sources said that the refinery had floated a tender to attract a contractor and financing for their upgradation. The deadline for the tender was in December, but Chinese investors had refused to participate in the bid saying that they could not participate unless the government addressed the issues faced by refineries. During the first tender, not a single investor had participated in a bid. PRL then floated a tender for the second time, with the last date to submit bids May 30th. However, industry officials have said that they are not hopeful that any investor will participate. Local refineries are said to be strategic national assets, playing a vital role in Pakistan's energy security and economic development. Refineries in Pakistan produce diesel in accordance with specifications notified by the Ministry of Energy (Petroleum Division). Importing a single cargo of HSD costs approximately $45 million in foreign exchangean unnecessary burden when adequate local supplies are available. Sources said that the country's refineries' upgradation projects would help double the diesel production in the country. Over the years, refineries have been investing in the upgradations, including capacity expansions and the installation of Isomerisation and Diesel Hydro Desulfurization (DHDS) units, enabling them to improve fuel specifications. Currently, Pakistan's refineries produce HSD with sulphur content ranging from Euro I to Euro V. One refinery already produces Euro V-compliant diesel, two supply Euro III, and the remaining produce diesel with sulphur content of around 5,000 ppmfar lower than the inaccurately reported figure of 10,000 ppm. Notably, even the refinery producing Euro V diesel faces challenges with product uptake due to inconsistent off-take by certain companies, resulting in operational difficulties. Delays in the Brownfield Refineries Policy 2023 implementation have affected timelines and are already in the knowledge of authorities. After the successful upgradation of the refineries, all local refineries will be supplying Euro V fuels. It is important to note that a significant portion of Pakistan's transport and agricultural sectors does not require Euro V diesel, making locally produced grades both suitable and efficient for market needs. Smuggled and substandard fuel entering the market is also a significant threat to product quality and market stability. Continued reliance on local refineries enhances energy resilience, curbs foreign exchange losses, and ensures a stable fuel supply for the country. The multibillion-dollar plant upgrade projects by Pakistan's refineries are at stake as the government has yet to resolve the issue of sales tax exemption on supplies of petroleum products.
Business Recorder
29-04-2025
- Business
- Business Recorder
Pakistan Refinery Limited struggles under heavy losses
Pakistan Refinery Limited (PSX: PRL) entered FY25 on unstable footing. The company struggled with shrinking gross margins and mounting operating expenses. These challenges unfolded despite operational improvements like better product yields and plans for a major Refinery Expansion and Upgradation Project (REUP). Persistent market issues—weak refining margins, competition from smuggled fuels, and policy uncertainty—exacerbated the pressure. The 9MFY25 financials show the situation has worsened. Net sales rose marginally to Rs235.96 billion versus Rs231.64 billion in 9MFY24—a mere 1.9 percent increase, which fails to offset cost-side issues. Gross profit collapsed to just Rs293 million from Rs13 billion a year earlier, with the gross margin close to zero. For context, gross margins were already under severe stress in 1HFY25 at just 1.26 percent. PRL posted an operating loss of Rs1.5 billion in 9MFY25, a major reversal from an operating profit of Rs11.25 billion in 9MFY24. After accounting for finance costs and taxes, PRL posted a staggering Rs4.6 billion net loss for the period, compared to a profit of Rs5.27 billion last year. The third quarter alone registered a net loss of Rs2.58 billion. Notably, gross losses and negative operating leverage worsened quarter-on-quarter. The decline was driven by the cost of sales outpacing revenue growth, reflecting either weaker refining spreads or unfavorable crude procurement costs. Selling expenses surged by 32 percent year-on-year for the quarter, adding further strain, while administrative expenses remained flat but still high. Finance costs stayed heavy at Rs2.82 billion for 9MFY25, like last year, suggesting no meaningful deleveraging. A taxation reversal softened the final hit slightly, but not enough to prevent the large net loss. PRL's financial strain must be viewed alongside its REUP ambitions. The transition toward producing EURO-V compliant fuels and minimizing furnace oil output demands heavy upfront investment and operational disruptions. These are exacerbated by the lack of immediate regulatory support, delayed benefits from the capacity expansion still underway, and persistent external headwinds like policy delays and fuel smuggling. PRL's 9MFY25 shows a company caught in a painful transformation phase. While REUP holds long-term promise, short-term financials are bleeding.
Business Recorder
28-04-2025
- Business
- Business Recorder
PRL struggles under heavy losses
Pakistan Refinery Limited (PSX: PRL) entered FY25 on unstable footing. The company struggled with shrinking gross margins and mounting operating expenses. These challenges unfolded despite operational improvements like better product yields and plans for a major Refinery Expansion and Upgradation Project (REUP). Persistent market issues—weak refining margins, competition from smuggled fuels, and policy uncertainty—exacerbated the pressure. The 9MFY25 financials show the situation has worsened. Net sales rose marginally to Rs235.96 billion versus Rs231.64 billion in 9MFY24—a mere 1.9 percent increase, which fails to offset cost-side issues. Gross profit collapsed to just Rs293 million from Rs13 billion a year earlier, with the gross margin close to zero. For context, gross margins were already under severe stress in 1HFY25 at just 1.26 percent. PRL posted an operating loss of Rs1.5 billion in 9MFY25, a major reversal from an operating profit of Rs11.25 billion in 9MFY24. After accounting for finance costs and taxes, PRL posted a staggering Rs4.6 billion net loss for the period, compared to a profit of Rs5.27 billion last year. The third quarter alone registered a net loss of Rs2.58 billion. Notably, gross losses and negative operating leverage worsened quarter-on-quarter. The decline was driven by the cost of sales outpacing revenue growth, reflecting either weaker refining spreads or unfavorable crude procurement costs. Selling expenses surged by 32 percent year-on-year for the quarter, adding further strain, while administrative expenses remained flat but still high. Finance costs stayed heavy at Rs2.82 billion for 9MFY25, like last year, suggesting no meaningful deleveraging. A taxation reversal softened the final hit slightly, but not enough to prevent the large net loss. PRL's financial strain must be viewed alongside its REUP ambitions. The transition toward producing EURO-V compliant fuels and minimizing furnace oil output demands heavy upfront investment and operational disruptions. These are exacerbated by the lack of immediate regulatory support, delayed benefits from the capacity expansion still underway, and persistent external headwinds like policy delays and fuel smuggling. PRL's 9MFY25 shows a company caught in a painful transformation phase. While REUP holds long-term promise, short-term financials are bleeding.
