Oil refineries face tough times due to the circular debt crisis

KARACHI: The oil refining industry of Pakistan is facing tremendous difficulties and many companies are running on 60 per cent of their capacities, informed Kalim A Siddiqui, President of Petroleum Marketing Business, Byco Petroleum Pakistan Limited (BPPL). “The circular debt crisis is also a challenge for the petroleum industry,” he added.

Unfortunately, the government did not announce anything to deal with the circular debt in the budget which has the potential to threaten the economy of the country, he said.

He was addressing a ceremony organised here on Saturday by BPPL, formerly known as Bosicor Pakistan Limited.

Siddiqui said that his company is aggressively launching its new brand identity for which they have been preparing for the past six to seven months.

“We want to be among the top three brands in Pakistan. We will turn into a full-fledged oil marketing company, retail marketing, consumer marketing and we also want to export our products,” Siddiqui said while revealing the ambitious plans for BPPL.

In February 2008, Abraaj Capital Limited (ACL), a leading private equity firm of Middle East, North Africa and South Asia (Menasa), joined hands with Bosicor Corporation Limited (BCL).

Under the agreed arrangement, a joint venture of BCL and ACL, in the ratio of 60 per cent and 40 per cent respectively, was established and listed in Mauritius.

The biggest oil refinery of Pakistan with the capacity of 115,000 barrels per day (bpd) is being set up under the auspices of BPPL.

At present, BPPL refines 30,000 bpd of crude oil, but after the completion of their new refinery, the refining capacity of BPPL would shoot up to 150,000 bpd. “This new refinery would lead us to the top position in local oil refining companies,” Siddiqui informed.

Beside this, BPPL is also investing in a floating jetty, 10-11 km from the seashore so that bigger ships of up to 100,000-200,000 tons could be harboured there, which cannot harbour at Port Qasim, which has maximum capacity of 50,000 tons, Siddiqui said.

The floating jetty will be operational by the start of the next year which will attract further investments into the country which will increase in our capacity to handle bigger ships, he said.

“We are at the number six in the present market of 12 oil marketing companies operating in Pakistan. We are eyeing the top three positions in the local market and later, being a multinational, we intend to go global,” he further revealed.

BPPL wants to remain in the market at the top- both in quality and quantity, he added.

“From next month, we are starting our liquefied petroleum gas (LPG) marketing, and other fuels, including CNG will be available at our outlets across the country,” he said.

BPPL commenced the sale of petroleum products with the establishment of its first retail outlet in 2007 and now it has over 100 retail outlets in Pakistan.

Published in the Express Tribune, June 13^th, 2010.