September 30, 2021 (MLN): Attock Refinery Limited (ATRL), the pioneer and pacesetter in the Pakistan Oil Refining industry, is targeting three new projects that include Continuous Catalyst Regeneration (CCR) plant, revamping of Diesel Hydro desulphurization (DHDS) plant, and Joint project of FFO up-gradation.
To recall, the company had witnessed a turnaround in earnings, posting a net profit worth of Rs1.07 billion (EPS: Rs10.01), compared to the losses of Rs4.69 bn (LPS: 43.95) reported in FY20.
The profitability of the company was largely attributable to the accelerated economic activities after lifting lockdown restrictions amid the Covid-19 pandemic which had pushed the demand for petroleum products.
In its corporate briefing session, the company revealed its plans to invest USD500mn in the up-gradation of CCR to produce Euro-V compliant Mogas and HSD and over 92 RON Mogas and to revamp its DHDS unit for production of Euro-V.
The management of the company expects to achieve the COD of these projects in 4-5 years. To highlight, some of the suggestions by companies in the Refinery Policy have already been incorporated in the Finance Act, 2021.
Furthermore, the company has already completed Licensor Front End Engineering Design (FEED)/Basic Engineering Design Package (BEDP) for CCR Platforming Unit and feasibility study for DHDS unit revamp project, according to key takeaways covered by Foundation Securities.
Speaking of project financing, the company said that 30-40% of the project cost would be financed through incremental revenues earned under the new policy while the remaining would be financed through debt taken from a local consortium of banks, it added.
While FFO up-gradation plant with other refineries is not part of that USD500mn cost. This joint project will cost around USD1.5-2.0bn.
Going by the report, ATRL management also discussed its plan regarding a new deep conversion Greenfield refinery of 50K BPD capacity. The management disclosed that the project is at the initial planning stage and its execution depends on enhanced supplies of local crude in the north market.
The company along with other refineries has been intensively engaged with the Ministry of Energy (Petroleum Division)-(MEPD) for the development of a comprehensive Refining Policy for the sustainability and up-gradation of existing refineries for the last two years.
The industry is facing the issues of spending amount previously collected in the account of deemed duty. To note, the incremental amount under the new refinery policy will be booked initially as revenue and then would be transferred to a reserved account for the expansion project.
A Working Group comprising representatives from MEPD and refineries was set up in December 2019. The Working Group has drafted Refining Policy and presented its proposals to the competent authority for approval. The outcome would be a new and vibrant policy for the oil refining sector to attract investment in greenfield refineries and enable the existing refineries up-gradation to produce more high-value and environment-friendly products, the company's official document said.
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