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The Attock Refinery Limited (ARL), a key player in Pakistan’s refining sector, is advocating for industry-wide collaboration to tackle regulatory challenges and attract essential investments, reports WealthPK.

The amendments to the Sales Tax Act, 1990, have raised costs and deterred investment in Pakistan’s refining sector by eliminating key incentives under the Pakistan Oil Refining Policy for Brownfield Refineries 2023, which was originally designed to support refinery upgrades through tax benefits.

ARL emphasises the need for a unified approach to ensure long-term sustainability and drive future growth amid the policy uncertainties and tax amendments impacting the refining sector. ARL is actively working to resolve these issues by engaging with the Ministry of Energy, Oil and Gas Regulatory Authority, and other stakeholders.

The company’s chief executive officer M Adil Khattak has emphasised the urgent need for policy reforms, calling for collaboration between the government and industry to create a supportive environment for refinery modernisation and investment.

Furthermore, ARL has proposed the creation of an industry-wide task force dedicated to engaging with regulators and policymakers. This initiative focuses on resolving tax-related issues, streamlining approval processes for refinery upgrades, and ensuring the effective implementation of policy incentives. Despite regulatory challenges, ARL has demonstrated resilience by implementing strategic measures to sustain operational efficiency and financial stability in the first half of the financial year 2024-25.

ARL exported surplus volumes in 1HFY25 to manage inventory pressures caused by declining local demand for furnace oil and naphtha, thus ensuring stable cash flows. Additionally, the company’s focus on diversified revenue streams proved beneficial, with non-refinery income contributing Rs649 million to overall profitability.

Moreover, ARL showcased resilience in its financial performance for 1HFY25 despite a challenging operating environment. The company posted a net profit of Rs6.89 billion, supported by non-refinery income and export revenues. On a consolidated basis, ARL’s net profit stood at Rs7.6 billion.

ARL remains committed to upgrading its facilities under the Brownfield Oil Refining Policy, aiming to produce cleaner fuels that meet global environmental standards and reduce reliance on imported refined products. However, delays in finalising agreements with Ogra have stalled progress on these crucial projects. ARL emphasises that addressing these delays is vital not only for the refining sector but also for Pakistan’s overall energy security and economic stability.

The company also highlights the importance of refinery upgrades, stating that they are essential for enhancing domestic fuel production, cutting import dependency, and strengthening the country’s balance of payments. The company calls for collective efforts to overcome challenges and unlock the full growth potential of Pakistan’s refining sector.

Credit: INP-WealthPk