Islamabad September 25 2024: Attock Refinery Limited is no more required to transfer profit to Special Reserve account after notification of Refining Policy, according to the company.
The Company was required to transfer an amount of profit above 50 percent of paid-up share capital as at July 1, 2002 to a Special Reserve account for expansion/modernization. However, after notification of the Refining Policy for Existing Refineries in August 2023, this requirement has been superseded and will not be applicable for future periods.
The pricing of the Attock Refinery petroleum products is carried out under the Import Parity Pricing Formula, as modified from time to time by the Government under which the cost of crude oil is determined on import parity basis. Product prices are fixed fortnightly, equivalent to the import parity price calculated under prescribed parameters.
The Government has approved Pakistan Refining Policy for Existing Refineries 2023, in August 2023 (the Policy). The Policy contains fiscal incentives in the form of tariff protection for existing refineries subject to strict terms and conditions including monitoring by OGRA.
Under the Policy, the refineries shall be allowed 10 percent tariff protection applicable on Motor Gasoline and Diesel’s ex-refinery price for 7 years period. However, the 10 percent tariff protection on Motor Gasoline and 2.5 percent on Diesel (incremental incentive) shall be deposited by refineries in the joint Escrow Account with OGRA for utilization for upgradation projects only. Withdrawals from the Escrow Account would be subject to OGRA monitoring, compliance with project milestone etc. Refineries will be allowed to withdraw maximum of 27.5 percent of the Upgradation project cost from the Escrow Account.
ARL plans to install a state of-the-art new deep conversion green-field refinery of 50,000 BPD capacity, if sustainable enhanced supplies of local crude from north become available and necessary support is received from the Government.
Recently, through the Finance Act 2024, the Government has made certain changes in the Sales Tax Act, 1990 which in turn have nullified the incentives envisaged under the Refining Policy 2023. Refineries have jointly taken up the matter with the Government. It is hoped that the matter would be resolved to the satisfaction of all stakeholders. The Company intends to sign the various agreements with OGRA under the Policy soon after resolution of the Sales Tax issue.
The plans of investments are dependent upon availability of sustainable local crude of suitable quality, demand supply situation of petroleum products, the prevalent/future product specifications in the country and the Government policies.
The Company posted a profit after tax of PKR 24,356 million from refinery operations during the current year compared to PKR 28,010 million during last year while non-refinery income during the year was PKR 888 million compared to PKR 1,215 million of last year. Resultantly, net profit for the year under review became PKR 25,244 million compared to PKR 29,225 million reported in fiscal year 2023.
