Oil refiners, who are often criticised as rent-seeking entities that are running obsolete plants and can’t make profit without government support, have hit back at critics by reporting robust financial results for the last fiscal year, said oil and gas industry expert Zuhair Ali Khan.
Byco Petroleum and Pakistan Refinery swung to profits while others lowered their losses.
“Oil refineries in Pakistan are configured to produce furnace oil, petrol and diesel,” he pointed out. “But the government’s decision to phase out furnace oil from the country’s petroleum products’ mix created a challenging situation for the petroleum companies.”
Their plants, which typically produced 30-40% furnace oil while processing crude oil, suddenly became obsolete.
Five major refineries of the country satisfy more than 30% of petrol and approximately 60% of the nation’s diesel demand while the rest is met through imports.
According to Khan, the demand for refined products is strong and healthy but no local or foreign investor has set up a new oil refinery in the country over the past decade.
Citing the reason, he said that it could be attributed to the tough regulatory environment and the lack of a favourable policy framework.
Oil refiners improved earnings in the previous fiscal year despite facing numerous complications arising from the coronavirus outbreak.
The industry saw some improvement in the business environment during the second half of the financial year ending June 2021 with recovery in energy demand driving the increase in earnings.
Published in The Express Tribune, November 14th, 2021.
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