Oil refiners report robust financial results for the fiscal year FY21 despite multiple complications caused by the COVID-19 outbreak.
Oil refiners face criticism for being rent-seeking entities that are operating obsolete plants and are unable to generate profits without government assistance have proven the critics wrong and produced impressive results according to oil and gas industry expert Zuhair Ali Khan.
Pakistan Refinery and Byco Petroleum made profits while others lowered their losses.
According to Zuhair, “Oil refineries in Pakistan are configured to produce furnace oil, petrol, and diesel”. He added, “But the government’s decision to phase out furnace oil from the country’s petroleum products’ mix created a challenging situation for the petroleum companies.”
Their plants, which typically generate 30-40% furnace oil from processing crude oil, all of a sudden became obsolete.
Five major refineries of Pakistan meet over 30% of petrol and nearly 60% of the country’s demand for diesel while the rest is satisfied through imports.
Khan is of the view that there is healthy and strong demand for refined products but no local or foreign investor has established a new oil refinery in Pakistan during the past decade.
He said that the reason behind this could be tough regulatory environment as well as the lack of an encouraging policy framework.
Oil refiners increased earnings during the previous fiscal year despite being faced with numerous pandemic induced complications.
The industry experienced improvement in the business environment in the second half of the financial year ending June 2021 as demand for energy recovered leading to the increase in earnings.
