National Refinery plans expansion to produce Euro-V fuel
KARACHI: To increase the gasoline production and to meet the country’s Euro-V specifications, the National Refinery Limited (NRL) plans to install a multimillion-dollar Continuous Catalyst Regeneration (CCR) platform unit along with other associated units.
The project is in the planning phase. “Refinery projects involve huge capital investment and accordingly under the prevailing circumstances a very careful approach is needed to start a new project. However, NRL is continuing to study the possibility of expansion,” the company noted in its annual report for FY21.
Moreover, a feasibility study has been awarded to Advisian of the UK regarding a joint venture with other refineries to undertake a hydrocracker/bottom of barrel project for the upgradation of the furnace oil to value-added products.
“It is expected that the study will be finalised by December 2021. Based on the outcome of the study, a future course of action will be decided,” the report noted.
The refineries are very keen regarding finalisation of the new refining policy, which has been in discussion for quite some time and is currently awaiting approval by the government before officially coming into force.
Analysts believe the new refining policy will pave the way not only for sustainability but also for the future expansions in the refining industry.
“[The] new policy will support refinery companies’ upgradation projects. The new refinery policy will make the sector financially sustainable and upgradation of the new projects more economical,” an analyst at Pearl Securities said.
The refinery management has flagged higher operating cost, the rupee versus dollar parity and increasing the utility expenses that significantly impact the company’s performance and cash flow position.
Considering uncertainty with respect to volatility in the crude oil and product prices and varying demand for the furnace oil and bitumen, the National Refinery Limited has been following a careful approach by operating its production units at optimum level.
The sales tax on crude oil, which was made zero-rated in 2007 has been reset to 17 per cent effective July 1, 2021, which would impact the refineries’ profitability because of increased working capital financing cost but would also further drain cash.
The refineries have taken up these issues and are hopeful that the new refining policy will provide some relief in the Customs duty.
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