Pakistan Refinery unveils plan to double capacity

Pakistan Refinery Limited (PRL) unveiled plans on Wednesday to double its capacity from 50,000 to 100,000 barrels a day through an expansion and upgradation project.

In a corporate briefing, the company said the project will enable it to produce EURO-V-compliant diesel and gasoline, while eliminating high-sulfur fuel oil production.

The project would help the country reduce fuel imports by 21% and save around $800 million. Pakistan imported 6.5 million tons of HSD and gasoline in fiscal year 2023-24.

PRL plans to complete the Front End Engineering Design study by December, with financial closure and the award of the EPC contract expected by December 2025. The project is slated for commissioning by December 2028, with an estimated cost of $1.5 billion funded through a mix of debt and equity.

Additionally, the upgrade will allow the production of petrochemicals like propylene, which will be exported. Currently, HSD and gasoline make up 28% and 9% of production, respectively. Post-expansion, these figures are expected to rise to 45% for HSD and 34% for gasoline. The refinery will produce an additional 4,076 tons per day, or approximately 1.3 million tons annually, based on a 50% throughput assumption.

Regarding the exemption of fuel imports from sales tax, which is currently zero-rated, PRL management stated that if implemented, the refinery would not be able to pass on input taxes, making them an expense for the company. The management is in discussions with the Ministry of Finance and the Federal Board of Revenue to resolve this issue.

PRL CEO Zahid Mir highlighted that smuggled fuel impacts demand assessment, complicating import planning. Currently, supplies exceed demand, creating a glut for local refineries.

In response to a query, PRL management confirmed the refinery's capability to process Russian crude if commercially viable, though Adnoc and Aramco are currently the best fits for PRL.