Government of Pakistan took over the management of NRL under the Economic Reforms Order, 1972. Presently NRL is under the Ministry of Petroleum and Natural Resources which is exercising control through its shareholding in State Petroleum Refining and Petrochemical Corporation (PERAC). NRL is highly reputed for the quality of its products. The NRL Quality Control Laboratories have ISO 9002 Certific
ation. The Company’s Environmental Management System has been accorded ISO 14001 Certification and its Occupational Health & Safety Management System has been accorded OHSAS 18001 Certification. NRL is a petroleum refining and petrochemical complex producing a wide range of fuels, l***s, BTX (petrochemicals), asphalts and specialty products for domestic consumption and export. It is located on a plot comprising 263 acres in the Korangi Industrial Area of Karachi. It is proposed to privatise NRL through sale of up to 51% equity and transfer of management control to a strategic investor. Citigroup Global Markets Limited is the financial advisor for this privatisation. NRL Capacity
The company’s refineries have a combined crude oil processing capacity of 2,710,500 tonnes per annum (tpa). NRL’s two l**e refineries have a combined designed production capacity of 176,200 tpa of l**e base oils (LBO) and its BTX unit has a designed production capacity of 25,000 tpa. NRL enjoys a competitive edge as it is the only refinery producing LBO in Pakistan. Details of the different plants are given below. First L**e Refinery: Designed and constructed by SNAM PROGETTI of Italy with a capacity to process 539,700 tpa of crude oil and to produce 76,200 tpa of LBO was commissioned in June 1966. This refinery also produces fuels, asphalt and specialty oils. Hydroskimming Fuel Refinery: Designed and constructed by Industrial Export Import (EIE) of Romania with a capacity to process 1,500,000 tpa of crude oil was commissioned in April 1977. Its capacity was increased to 2,170,800 tpa in February 1990. The fuel products consist of LPG, motor gasoline, kerosene, jet fuels, diesel and furnace oil. Second L**e Refinery: Designed by CE Lummus of UK and constructed by Industrial Export Import (EIE) of Romania was commissioned in January 1985. It has a designed capacity of 100,000 tpa of LBO and 110,000 tpa of asphalt. BTX (petrochemical) Plant: Designed and constructed by Nordon et Cie of France with a capacity to produce 25,000 tpa of BTX was commissioned in April 1979. It was the country’s first petrochemical unit. This plant produces Benzene, Toluene and Xylene for the specialty chemicals market. Toluene is also used in NRL’s own dewaxing units. NRL’s gross storage capacity, both at the refinery site in Korangi and at Keamari harbour, comprises about 163,000 tonnes (20 days) for crude and 90,000 tonnes for petroleum products. The petroleum products are pumped from NRL storage tanks to oil marketing company (OMC) terminals or to Karachi airport by pipelines. Other products such as l**e base oils, asphalt, chemicals (BTX) are transported through trucks and tank lorries. Five Years Production
NRL’s production for five financial years up to the financial year ending 30th June 2004 is shown in the table below:
Unit: Tonnes
Financial Years Ending 30th June
Product
2000
2001
2002
2003
2004
Motor Spirit
276,611
174,516
142,630
137,417
157,575
Kerosene
164,766
77,945
36,292
22,870
13,827
HOBC
5,081
-
-
-
-
High Speed Diesel
549,001
553,968
603,084
737,444
754,558
Light Diesel Oil
286,939
242,092
186,323
176,701
154,813
Furnace Oil
661,288
659,543
599,856
582,724
577,822
Aviation Fuels
298,255
241,249
209,840
191,416
203,673
Naphtha
136,018
209,961
271,198
240,869
205,905
LPG
17,669
15,056
12,764
15,259
17,797
Jute Batching Oil
-
641
593
-
-
L**e Oil
176,150
178,695
184,975
175,869
178,833
Asphalt
140,013
135,275
114,276
170,136
209,327
Process Oil
184
-
-
10
288
Solvent Oil
446
-
-
-
-
Carbon Oil
13,099
8,031
8,647
994
-
BTX
-143
1,460
196
-174
-
Wax
3,023
3,059
2,989
3,456
3,808
Total Products
2,728,400
2,501,491
2,373,663
2,454,991
2,478,226
Local Crude
366,671 302,735 338,622 379,085 2,295,156
Imported Crude
2,526,095 2,552,998 2,293,840 2,041,026 314,056
Total Processed
2,892,799 2,855,733 2,632,462 2,420,111 2,609,212
Total Crude Processed in Pakistan
6,519,240
6,739,345
8,991,477
9,582,166
10,469,130
NRL’s Share
44.4%
42.4%
29.3%
25.3%
24.9%
Expansion of Facilities
To meet the growing demand of LBO a L**e Refinery Revamp Project has been undertaken with the technical assistance of ExxonMobil. On completion of the project, expected in second quarter of 2005, the production capacity of the second l**e refinery will be enhanced by 14,800 tpa, thus bringing the combined designed capacity of the two l**e refineries to 191,000 tpa. The entire increase in capacity is dedicated to the production of high viscosity bright stock (BS HVI) grade of l**e oil. Estimated cost of the project is Rs. 962 million. Recently, National Refinery has completed its project of Self-Power Generation. Self-Power Generation plant has a 7.5 MW steam turbo-generator and a 4.0 MW Diesel-Fuel Oil Engine Power Generator. The self-power generation is meant for continuous uninterrupted power supply and to avoid plant shut-down and production loss due to power break-down. A private company Annoud Power Generation Company Limited (APGL) is the primary source of power supply to NRL. Deregulation
The l**e base oil (LBO), asphalt, BTX and specialty oils segment of NRL’s business is deregulated and operates in a free market environment. Despite tough competition from low quality and cheaper smuggled products, the LBO sales contributed Rs. 1,203 million or 65% of the total refinery margins for the financial year ending 30th June 2004. The present Government is committed to gradual deregulation of the petroleum fuel refining sector. As a first step, it deregulated furnace oil and LPG by allowing refineries to fix prices on a competitive basis. Thereafter with effect from 1st July 2001, the petroleum industry was allowed to set prices of other fuel products through the Oil Companies’ Advisory Committee (OCAC) on a fortnightly basis by using a transparent pricing mechanism approved by the Government. The Government has decided to deregulate import of high speed diesel (HSD) and therefore with effect from 1st September 2002 allowed OMCs to fix the final sale price on cost competitive basis. The refineries, however, will continue to determine price of HSD according to the revised import parity formula sanctioned by the Government. As one of the measures for deregulating the petroleum sector, the import parity pricing formula for fuel refineries was modified with effect from 1st July 2002. The government’s guarantee ensuring a profit after tax with a floor of 10% and a ceiling of 40% on the paid-up capital was withdrawn. Instead an incentive was provided through tariff protection by allowing the benefit of deemed custom duty. This has resulted in increased ex-refinery prices of high speed diesel, kerosene, JP-4 (jet fuel) and light diesel oil. In consequence to these changes, gross margins on fuel products have improved significantly. Organisation
The Board of Directors is headed by a non-executive Chairman and comprises eleven Directors. Nine Directors including the Chairman and Managing Director/Chief Executive Officer are nominated by Government. One non-executive Director is nominated by the Islamic Development Bank (IDB) while one non-executive Director is from the private sector. The company’s head office is located in Karachi. NRL’s total manpower strength is 943 persons comprising 365 management, professional and technical (MPT) staff and 578 non-MPT staff. Environment and Energy Conservation
NRL has a well defined Environmental Policy which plays a key role in its decision making process to ensure compliance with relevant laws (NEQS) and to achieve continuous improvement. Various measures are constantly undertaken to combat pollution caused by emissions and effluents. Regular monitoring of these measures is carried out to determine environmental performance. A number of energy conservation projects have been implemented at NRL which have considerably reduced energy consumption per barrel of crude oil processed. Information Technology
The company has a strong information technology capability. Computerized instrumentation and auto-tank gauging are being applied. The technical staff use a variety of computer software for process design, performance monitoring, simulation and engineering design. Software for different technical projects, shipping and excise and warehouse functions is being developed in-house. The financial and accounting data reside in a computer based management information system that is able to produce reports and data on a timely basis. NRL is implementing an Enterprise Resource planning (ERP) solution, SAP, to streamline planning and coordination, thereby improving overall eficiency. The Financial, Maintenance, Materials Management and Human Resources modules were implemented ahead of schedule, going live on August 01, 2004. This was an extensive cross-functional exercise requiring an understanding of the relationships and inter-linkages between the various systems within NRL. Future plans include the implementation of Modules for oil & silo management, production planning and quality control. Financial Information
NRL has an issued, subscribed and paid-up capital of Rs. 666,388,000 which is represented by 66,638,800 shares. Five state owned or controlled organizations hold 54.33% of NRL’s shares with the principal shareholders being PERAC (16.14%), NIT (30.53%), State Life Insurance Corporation (6.91%), National Bank of Pakistan (1.54%) and Investment Corporation of Pakistan (0.74%). The Islamic Development Bank owns 15% of NRL’s equity. Other shareholders, including various private individuals as well as institutions, hold the remaining 30.67% of NRL’s equity. NRL is listed in the Karachi, Lahore and Islamabad stock exchanges. During the period July 2003 to June 2004 the share price of NRL has ranged between Rs. 97.50 and Rs. 209.90 with an average price of Rs. 160.31. As of June 30, 2003 the NRL share price was Rs. 197.30 per share which rose to Rs 233.90 per share on September 2, 2004. The average daily volume of shares traded during the period July 2002 to June 2003 was 10,682,870. Share price as of September 21, 2004 was Rs. 214.95. The company’s earning per share has risen from Rs. 4.19 in financial year ending 30th June 1996 (FY 1996) to Rs. 27.75 in FY 2003. Details of the financial performance of the company are given in the following table:
