PACRA maintains PRL ratings at ‘A/A1’ with stable outlook

June 10, 2026 (MLN): Pakistan Credit Rating Agency (PACRA) has maintained its entity ratings for Pakistan Refinery Limited (PSX: PRL), reaffirming a Long-Term rating of 'A' and Short-Term rating of 'A1', with a Stable outlook, as of June 5, 2026.

The ratings show PRL's strategic importance in Pakistan's downstream energy chain and its close association with Pakistan State Oil Company Limited (PSO), the country's largest oil marketing company.

Strong supply chain integration and established procurement linkages between the two entities underpin PRL's operational stability and distinguish it within the domestic refining sector.

PACRA noted that the Pakistan refining sector remains inherently exposed to global petroleum price dynamics, with gross margins highly sensitive to crude oil and refined product benchmark movements.

PRL's hydro-skimming configuration makes it particularly responsive to crack spread fluctuations.

The operating environment in FY26 was shaped by a regional conflict in late February that led to the temporary closure of the Strait of Hormuz a critical transit route for Pakistan's crude imports.

The disruption triggered a sharp surge in crude prices, with marine war risk premiums reaching approximately $4m per vessel and effectively doubling the landed cost of an Aframax cargo.

As a coastal refinery largely dependent on seaborne imports with local crude accounting for 15 to 20% of intake PRL faced direct supply chain dislocation and significant cost inflation.

The Company responded through adaptive sourcing strategies that helped sustain operational continuity.

Simultaneously, the crisis drove a sharp widening in product crack spreads, with high-speed diesel (HSD) and motor spirit (MS) margins rising markedly, contributing to a sector-wide swing from losses to a combined profit of approximately PKR 43 billion in Q3FY26.

Within this environment, PRL delivered a material financial turnaround. For the nine months ended March 31, 2026, the Company posted a profit after tax of Rs12.08bn, reversing a net loss of PKR 4.59 billion in the same period last year.

The third quarter alone contributed PAT of Rs9.9bn, supported by the Company's highest-ever gross profit of Rs18.9bn and record gross margins of 19.4%.

On the expansion front, PRL remains the only Pakistani refinery to have signed an upgrade agreement under the Brownfield Refinery Policy 2023.

Its Refinery Expansion and Upgradation Project (REUP) targets a capacity doubling from 50,000 to 100,000 barrels per day, Euro-V compliant fuel production, and deep conversion facilities to reduce furnace oil output at an estimated cost of around USD 1.2 billion.

Key milestones include the appointment of Meezan Bank and JS Global Capital as financial advisors and execution of the FEED contract with Wood Group UK Limited.

Government-level policy discussions remain ongoing, with resolution seen as a key catalyst for project execution.

PACRA noted that the rating trajectory will remain dependent on the sustainability of PRL's profitability as crack spreads normalise, the Company's ability to manage leverage and meet debt servicing obligations, and the pace of progress toward financial close and execution of the REUP.

Copyright Mettis Link News