NRL to partly fund Rs31bln upgrade project

KARACHI: National Refinery Limited (NRL) decided to halve the financing requirement for upgrading its refining facility to Rs12.1 billion as the leading oil refinery runs in the black to partly fund the revamp, an official said on Wednesday.  

NRL had arranged financing worth Rs24.2 billion from a syndicate of local banks, comprising of UBL, HBL and others to fund an estimated Rs31 billion ($303 million) up-gradation project.

“The syndicated term finance facility has been reduced from Rs24.2 billion to Rs12.1 billion with all other terms and conditions remaining the same,” said Nouman Ahmed Usmani, company secretary at NRL told The News.

“There is no change in the project costs or the timeline, but now we have decided to partly fund it out of our internal resources,” Usmani said. The project includes establishment of diesel hydro desulphurisation, isomerisation and other auxiliary units. Diesel desulphurisation will comply with the Euro-II environment standards as directed by the government. This facility will make the NRL qualify for a deemed duty of nine percent as against the existing 7.5 percent. Isomerisation unit will convert naphtha into motor spirit, which is a higher margin product.

Works on diesel desulphurisation and naphtha isomerisation are underway. The equipment are being installed. The facilities are expected to be completed by the mid of this year.  The revamp will improve the quality of diesel and enhance the production of motor gasoline. Currently, the company’s plants have a fuel refining capacity of 2,710,500 tons per annum (TPA) of crude oil, two lube refineries with a combined designed capacity of 191,200 TPA of lube base oils (LBO) and a BTX unit with a designed capacity of 25,000 TPA. NRL enjoys a competitive edge over Attock and Pakistan refineries, as it is the only refinery producing LBO in Pakistan.

NRL earned Rs1.905 billion in profit for the quarter ended September 30, translating into earnings per share of Rs23.83. In the same period last year, the oil refinery posted a profit of Rs406 million and EPS of Rs5.08. High product margins and increase in sales led to improvement in profitability.