PRL ends 20-day shutdown

Company resumes operations amid high demand for diesel in wheat sowing season

KARACHI:

Pakistan Refinery Limited (PRL) has reopened its production facility amid high demand for diesel during the ongoing sowing season of the staple crop of wheat.

“PRL has restarted its refinery operations from December 31, 2022,” Company Secretary Shehzad Aminullah said in a notification to the Pakistan Stock Exchange (PSX) on Monday.

The company’s share price increased 4.55% (or Rs0.59) to Rs13.56 with a volume of 12.7 million shares at the PSX.

Earlier, the management had shut the plant down for a planned period of 20 days with effect from December 10, 2022. The move was made primarily with the objective of planning regeneration – an inspection of the plant and revamping it to remove bottlenecks.

Arif Habib Limited Head of Research Tahir Abbas said, “The concerned authorities had asked all the refiners to delay implementing their regeneration plans in view of the high demand for the most expensive product in the country, i.e., diesel, amid the ongoing wheat sowing season.”

Farmers mostly use diesel in tractors to level agricultural land and to sow the seeds. Agricultural, industrial, railways and road transportation sectors are the four big consumers of diesel in the country.

Pakistan had to delay the cultivation of wheat this year due to the August-September 2022 floods. It also took a considerable time for the water to recede from the inundated fields.

Pakistan cannot afford to sow a smaller volume of the staple crop as the price of the commodity has spiked in world markets in the wake of the Russia-Ukraine war.

The Ministry of Energy (Petroleum Division), Oil and Gas Regulatory Authority (Ogra) and Oil Companies Advisory Council (OCAC) had asked the refineries to delay their planned annual turnaround activity (ATA) until February 2023, keeping in view the demand for diesel.

A consensus, however, was reached to shut the plants down later for a limited period of time.

The price of diesel has jumped in the world markets becoming much more expensive than crude oil (unrefined oil), pressing refineries to opt for local production instead of importing in order to save foreign exchange reserves.

A couple of refineries had already closed their plants to cope with the production of the out-of-demand Furnace Oil (FO), as it occupied a large part of available reservoirs amid the lack of technology to convert it into valued products like diesel and petroleum.

The government’s policy to import furnace oil in early 2022 also multiplied the FO crisis.

Published in The Express Tribune, January 3^rd, 2023.

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