Karachi: Pakistan Refinery Ltd (PRL) conducted its FY23 analyst briefing today, disclosing a notable decline in earnings and outlining extensive plans for future upgrades. The refinery reported earnings of PkR1.82 billion for FY23, a significant decrease from the previous year, although net revenues rose by 37%.

According to AKD Securities Limited, the refinery, established in 1952 with a throughput capacity of 50,000 barrels per day, faces several challenges. These include a PkR7.2 billion loss due to currency depreciation, increased letter of credit conversion charges costing PkR2.0 billion, and losses of PkR2.9 billion from HSFO exports. The management expects these issues to normalize with the stabilization of the country’s economic situation.

The company is concluding a Front End Engineering Design (FEED) study for a major upgrade, anticipated to complete by the second quarter of FY25. The upgrade aims to produce Euro-V compliant fuel, install deep conversion technology, and double the refinery’s capacity to 100,000 barrels per day. The management plans to award the engineering, procurement, and construction (EPC) contract by the second quarter of FY26, with the upgraded facility expected to be operational by the second quarter of FY29.

PRL is also adapting to changes in the regulatory environment, such as the sales-tax exemption on High-Speed Diesel (HSD) introduced in the Federal Budget FY25, which has posed new challenges. Additionally, PRL has moved towards processing lighter crude to improve its product mix, focusing more on Motor Spirit (MS) and High-Speed Diesel (HSD), reducing its reliance on heavy crude which skewed production towards less profitable High Sulfur Fuel Oil (HSFO).