Refinery production drops 14% in November

Cash constraints force refineries to slow down.

KARACHI:

Refinery production has declined by 14% on a year-on-year basis to 590,000 tons in November, according to provisional numbers.

Ever-increasing circular debt is the primary reason behind the decline in the refinery production, according to a JS Global Capital research note.

Attock Refinery and Pakistan Refinery saw their production marginally improve by 2% and 1%, respectively, while National Refinery and Pak-Arab Refinery Company’s production declined by 18% and 15%, respectively, in November.

The available data also shows that Byco Petroleum production was at a standstill during the period under review.  The decline was largely led by lower production of furnace oil and high speed diesel by 18%YoY and 14%YoY, respectively. Petrol production also dipped by 4% on a yearly basis, says the note.

Further accumulation of circular debt due to the failure of the government to release money is a major cause for the decrease in production.

Nevertheless, cumulative refinery production in the first five months of fiscal 2012 increased by 4% to 3.2 million tons. The improvement was largely witnessed in production of diesel, up 11% on a yearly basis, due to low base of last year.

Last year’s floods had led to temporarily closure of refineries including the country’s largest refinery Parco. Meanwhile, petrol production jumped 9% on a yearly basis owing to gas shortage in the country.

Published in The Express Tribune, December 17^th, 2011.