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KARACHI: With a cost of around USD 1.7 billion, the Pakistan Refinery Limited (PRL) is spearheading transformative Refinery Expansion & Upgrade Project (REUP), aimed at doubling the crude processing capacity from the existing 50,000 to 100,000 barrels per day, with zero production of high sulphur furnace oil (HSFO) in five years after the project achieves its financial close.

Zahid Mir, PRL Chief Executive Officer (CEO) said the REUP will cost around USD 1.7 billion with the production of propylene, first time by any refinery in the country.

He stated this while addressing an event, “PRL Connect 2024,” on Friday here at a local hotel, under the theme “Powering Progress, Doubling Capacity.”

He said: “Our journey towards doubling capacity is not just about numbers; it is about laying the foundation for a self-sufficient and sustainable energy future for Pakistan. We invite banking partners to become integral parts of our journey.”

To attract huge investment of USD 1.7 billion in next five years, he said it is challenging in the present conditions and revealed that refinery has asked State Bank of Pakistan to allow it retain export proceeds of fuel oil, which are to the tune of USD 200 million annually.

He said FO is the major issue as it is highly negative margin product, he said and pointed out that due to more production of FO, refinery could not produce Euro specifications product and refinery had to pay Rs 25 billion in penalties to government for not producing these products.

The REUP is a strategic initiative not only ensures a significant boost in capacity but also focuses on enhancing profitability.

The project is designed to zero furnace oil production, redirecting efforts towards maximizing the production of highly profitable products like petrol and diesel of Euro V standards.

PRL’s Chairman of the Board of Directors Tariq Kirmani on this occasion highlighted the company’s stellar operational performance in the current and last quarter, achieving record-breaking profits, 100% plant availability, and company’s highest-ever sales of diesel & petrol in September 2023.

By aligning with market demands and prioritizing lucrative fuel products, the PRL’s REUP initiative aims to set new industry benchmarks for financial success and sustainability.

The event provided a platform for industry leaders, stakeholders, and partners to converge and explore PRL’s transformative journey towards a sustainable energy future.

The PRL showcased its strategic decision to embrace the Brownfield Refinery Policy, approved by the Federal Cabinet in August 2023. The policy, lauded for encouraging existing refineries to upgrade and expand, positions PRL for a transformative change in the refining industry.

A major development highlighted during the event was the shift in majority shareholding to Pakistan State Oil (PSO), signalling PSO’s strong commitment to upgrade and expand PRL. This move also ensures vertical integration for PSO as it secures a reliable supply chain.

The chairman emphasized that the REUP is not only beneficial for the PRL but also for the PSO and the entire country. The project generates employment opportunities, stimulates economic activity, and contributes significantly to the national GDP, reducing import dependency and saving valuable foreign exchange.

The chairman extended gratitude to the attendees and invited banking and financial institutions to join hands with PRL in realizing the ambitious REUP project. The call for partnerships aims to forge ahead, doubling capacities, embracing sustainability, and contributing to the progress of Pakistan.

“The PRL Connect 2024 marks a pivotal moment as we unveil our vision for a sustainable energy future. Our achievements and strategic decisions pave the way for transformative change, and we invite partners to join us in this ambitious journey,” he said.

Copyright Business Recorder, 2024

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