Shams ul Nisa

The Pakistan Refinery Limited (PRL) is navigating financial challenges amid shifting policies and major expansion plans, positioning itself as a pivotal force in Pakistan’s evolving energy landscape, reports WealthPK. PRL, a subsidiary of Pakistan State Oil, remains a key player in the country’s petroleum sector, with a processing capacity of 50,000 barrels per day.

For the nine months ending March 31, 2025, the company reported a loss of Rs4.6 billion, a sharp contrast to the Rs5.3 billion profit recorded during the same period last year. This downturn was driven by falling global refining margins, declining petroleum product prices, and reduced local demand for High Sulphur Furnace Oil (HSFO) as the power sector shifted toward alternative energy sources.

Despite these setbacks, PRL demonstrated resilience through strong operational efficiency and record production of High-Speed Diesel, showcasing its ability to navigate a challenging market environment. The removal of sales tax on key petroleum products has negatively impacted PRL’s profitability and created uncertainty around its Refinery Expansion and Upgrade Project (REUP).

In response, PRL and other industry stakeholders are in talks with the government to explore viable solutions, such as tax recovery through pricing mechanisms. Resolving these issues will be critical for the future of Pakistan’s refining sector and energy development strategy.

Despite the current challenges, PRL remains committed to the REUP, which aims to double its processing capacity to 100,000 barrels per day, eliminate HSFO production, and introduce Euro V-compliant fuels. The company is also seeking strategic investors to support the expansion, signaling its confidence in the sector’s long-term potential.

PRL’s expansion through the REUP is expected to deliver substantial economic benefits. Doubling refining capacity will enhance energy self-sufficiency, reduce reliance on fuel imports, and support the trade balance, while also creating skilled jobs. Moreover, the introduction of Euro V fuels aligned with international environmental standards will help attract investment and promote sustainable growth.

The project is also expected to generate broad economic ripple effects, including support for downstream industries, increased government revenues from higher output and improved product quality, and the transfer of advanced refining technologies to strengthen local technical expertise.

PRL reflects both the challenges and potential of Pakistan’s evolving energy sector. Its future depends on effective policy support and the successful execution of its expansion plans. As PRL moves forward with the REUP, its progress will serve as a key indicator of Pakistan’s broader energy trajectory.

Credit: INP-WealthPk