Cnergyico PK Outlines Expansion Plans and Corporate Restructuring

Karachi, Cnergyico PK Limited, Pakistan's largest refinery, detailed its strategic initiatives and financial outlook in an analyst briefing on Friday. The company announced plans to elevate its production levels and restructure its operations into six subsidiaries, aiming to enhance governance and attract investment.

According to AKD Securities Limited, the briefing highlighted the company's commitment to increasing its refining capacity from the current 22k barrels per day (BPD) to 55-60k BPD in FY25, dependent on the export dynamics of residual furnace oil (RFO). The company, which currently handles a vast range of operations from oil shipping capable of managing very large crude carriers (VLCC) to a robust oil marketing network of over 470 retail sites, faces significant challenges including currency depreciation and restrictive government policies on crude price hedging.

Further, Cnergyico PK intends to spend US$1.0 billion on refinery upgrades to meet Euro-V compliance standards, a move expected to diversify its product output to 48% petrol, 33.3% high-speed diesel, and 9.3% RFO. The management also noted an ongoing negotiation over receivables amounting to PkR55 billion from the Government of Pakistan, which contrasts with its PkR47.5 billion in payables.

The company's plans also include leveraging improved freight dynamics through Single Point Mooring systems that facilitate the full-capacity operation of oil vessels, significantly cutting costs associated with delays and demurrage. Additionally, Cnergyico PK is exploring the potential of its nascent chemical segment, which it plans to fully operationalize following the proposed demerger, thereby opening up avenues for external investments.

Cnergyico PK’s briefing also touched on recent operational challenges, such as infrastructure damages in Baluchistan, which have since been mitigated by establishing an alternative pipeline route ensuring continued operations. With these strategic initiatives, the company aims to position itself for sustainable growth and operational efficiency in the coming years.