Less dependent: NRL cuts bank loan support

Firm says cash flows will now be injected for expansion

KARACHI: National Refinery Limited (NRL), owned by cash-rich Attock Group, has cut half its dependence on banks’ loan for expansion and introduction of better quality diesel in demand for Euro-II vehicles by June 2017.

“This is to inform that on NRL request, the Syndicate Term Finance Facility has been reduced from Rs24.2 billion to Rs12.1 billion...In this connection the requisite supplemental agreements have been signed by all the parties concerned,” Nouman Ahmed Usmani, Company Secretary, NRL said in a notification to Pakistan Stock Exchange.

He told The Express Tribune that the firm was maintaining significant cash flows that will now be injected in the said expansion and better quality product projects.



NRL, which is the second largest fuel oil refinery of Pakistan, is pursuing an upgrade project that comprises of Diesel Hydro Desulphurisation and Isomerisation projects and auxiliary units.

The projects would help the firm produce better quality diesel and increase production of petrol (motor gasoline) by 192,000 tons per year, it was learnt.

“The company estimates that the project (de-sulphurisation and isomerisation) will be completed on time and within the project value of $349 million,” the CEO said in the annual report.

Chinese contractors are working up the said projects.

NRL Deputy Chairman & Chief Executive Officer Shuaib A Malik said in Annual Report 2016 “the completion of HSD {High Speed Diesel} de-sulphurisation would yield the price of Euro-II product, while increase of 1.5% deemed duty on HSD is under discussion with Ministry of Petroleum and Natural Resources that would result in improved margins.”

“Prevailing higher price of motor gasoline compared with the export price of Naphtha would also result in improved profitability. On completion of Isomerisation project the production of Motor Gasoline would increase by conversion of most of Naphtha currently exported at lower price,” he added in the report.

“The aforesaid projects are expected to be completed by mid of 2017,” he said in the latest report for the quarter ended September 30, 2016.

Refinery details

The refinery has a production capacity of 2.71 million tons per year, including multiple grades of lube base oils.

The share price of the company decreased 0.26%, or Rs1.52, and closed at Rs567.52 with a volume of 274,300 shares.

The United Bank Limited as the Agent and Habib Bank Limited as Security Trustee are the local banks in the consortium of the Syndicate Term Finance Facility of Rs12.1 billion.

The debt is being acquired  at the rate of 1.7% above six months KIBOR. The loan is to be repaid in 10 years semi-annual payments with grace period of two years.

The government had tasked local refineries to produce Euro-II standard products by December 2012. Later, the Economic Coordination Committee of the Cabinet extended the deadline to December 2015.

The firm has reported net profit of Rs1.90 billion for the quarter ended September 30, 2016, translating into earning per share (EPS) at Rs23.83. The profit is almost five times higher than Rs406.11 million (EPS Rs5.08) booked in the same quarter last year.

As of June 30, 2016, Attock Group holds 51% equity stake in the National Refinery Limited through Attock Refinery Limited, Pakistan Oilfields Limited and Attock Petroleum Limited.

Published in The Express Tribune, January 5^th, 2017.

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