PARCO to enhance its refinery capacity through addition of new units by FY19: PACRA

December 17, 2018 (MLN): Pakistan Credit Rating Agency (PACRA) has maintained entity ratings of Pak Arab Refinery Limited at ‘AAA’ for long-term and ‘A1+’ for short-term, with a ‘stable’ outlook forecast.

According to the rating agency, the ratings reflect PARCO’s ownership structure- owned by the Government of Pakistan (GoP) (60%) and Emirates of Abu Dhabi (EAD), through Abu Dhabi Petroleum Investments LLC (40%) - a majority owned company of EAD.

The company is contributing substantially towards the socio-economic benefits and forex saving and its low business risk emanates from its leading market position, strong demand for its products, and its advanced plant technology.

The ratings recognize the Company’s ability to manage its financial profile. Increasing dividend income from subsidiaries and Joint venture companies and strong investment returns reflect positively on the company’s performance.

Moreover, the ratings reflect PARCO’s strengthened position in midstream and downstream sector resulting through recent acquisitions and completion of expansion projects.

Going forward, PARCO is enhancing the capacity of its existing 100,000 bpd refinery to 120,000 bpd through the revamp of existing units and the addition of new units which is expected to come online by end-FY19.

Strong capital structure and sizeable equity of the company has enabled to absorb financial outflow. With these capacities to come online, the bottom line of the company is expected to increase manifold over the time.

Effective management of upcoming projects, favorable regulatory regime, and consistency in Government policies remain critical for the ratings.

The ratings are dependent on the sustained competitive positioning of the company.

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