Attock Refinery Limited

About Cover Story

Facing upto

Challenges

Attock Refinery Limited (ARL) is the pioneer of crude oil refining in the country with its operations dating back to 1922. Backed by a rich experience of more than 100 years of successful operations, ARL has now grown into a modern state-of-the-art refinery with a name plate capacity of 53,400 barrels per day.

The past three years have seen a series of unprecedented events worldwide including disrupting demand and supply patterns leading to an extremely tight global oil market. The unnerving combinations of a global pandemic compounded by energy scarcity, rapid inflation, geopolitical tensions etc. have all created new challenges around us.

After a sharp collapse in oil demand due to the COVID-19 pandemic, a stronger-than- expected demand rebound came

due to the Russian - Ukraine conflict and the subsequent sanctions on Russian crude and product created new challenges for world economies and Pakistan is no exception.

Pakistan business environment during the recent past has remained very challenging and volatile especially for Oil Refining Sector. Factors like stringent environmental regulations, reliance on alternate sources of energy, economic recession, smuggling from neighbouring countries and political instability has added to the difficulties of refineries.

Since past few years, there was a major shift in the Government policy for power generation from furnace oil to alternate fuels. The aftermath of this decision has left limited choices for Refining sector. Refineries have to either store

the product during lean periods or export the surplus quantity. To cater for this challenge, ARL has initiated process to acquire dedicated FFO storage facility at Port Qasim, Karachi in order to enhance its operational flexibility.

The whole industry including ARL has been struggling with the menace of smuggling of petroleum products from the neighbouring countries which have seriously impacted product uplifting especially High Speed Diesel. ARL remained engaged with the relevant regulatory authorities to perform their vigilant role in curbing this menace, which is not only causing revenue losses to the Government but also damaging the local industry.

The crude supplies to ARL from northern fields have declined to a level of 40,000 BPSD. In order

Annual Report 2023

to augment capacity utilization of our Refinery, ARL pursued Government for allocation of crude from southern oilfields and its freight reimbursement from country IFEM Pool. The matter has been recently approved

by Economic Coordination Committee (ECC) of Cabinet thus paying way for getting the around 5,000 bpd supplies of crude from southern oil fields in near future. This crude allocation will not only help ARL to operate at optimum capacity but will also result in saving of precious foreign exchange and additional freight savings to Government of Pakistan.

Due to sharp decline of country's foreign exchange reserves, ARL along with other industries faced serious challenge for opening/ retiring of Letter of credits (LCs). However, with the help of different state institutions including

Ministry of Energy (Petroleum Division)-MEPD, Oil Gas Regulatory Authority (OGRA) and State Bank Pakistan (SBP) ARL was able to ensure continuity of critical supply chain. Besides, ARL alongwith other foreign companies have been facing challenges in repatriation of dividend payments to their shareholders due to restrictions on foreign exchange payments for the last one year. We expect from relevant authorities to resolve this issue to keep the faith of foreign investors especially in capital intensive industries like refineries.

ARL in collaboration with other local refineries has been continuously emphasizing the need for a comprehensive and vibrant Refining Policy as the Refining Policy was last revised in 1997. After continuous following up with MEPD, the Refining Policy for brownfield refinery projects

has been finally approved and is expected to provide solace to the complicated challenges of today's refining sector in Pakistan. With approval of the Refining Policy 2023, ARL will be undertaking a major upgradation project for value addition.

Amidst continuously evolving challenges and rapidly changing economic environment, ARL is not only facing upto daunting challenges but also striving to turn these into opportunities for a promising future. We shall continue to work for sustainability of our existing operations by taking proactive strategic decisions with collective wisdom and to up-grade our facilities to meet the future challenges.

Attock Refinery Limited

Annual Report 2023

TABLE OF CONTENTS

04

Honors & Achievements

74

Audit Committee Report

113

Financial Highlights of AHL

06

Company Profile

76

Pattern of Shareholding

114

Statement of Free Cash Flow

07

Accreditation & Certifications

114

Dupont Analysis

08

Series of Firsts & Major Events

Strategy and Resource Allocation

115

Analysis of Quarterly Variation

78

Strategic Plan

Organisational Overview and

79

Resource Allocation Plan

Compliance with Code of

External Environment

Corporate Governance

10

Principal Business Activities

Risk and Opportunities

116

Statement of Compliance

and Markets

82

Risk and Opportunities

119

Independent Auditor's Review Report

11

Key Brands and Products

84

Liquidity Strategy

12

Geographical Presence of ARL's

84

Capital Structure

Financial Statements

Business

123

Independent Auditor's Report

14

Vision and Mission

Corporate Social Responsibility

to the Members

15

Core Values

86

Corporate Social Responsibility

128

Statement of Financial Position

16

Code of Conduct

130

Statement of Profit or Loss

22

Group Structure

Future Outlook

131

Statement of Profit or Loss and Other

23

Organogram

92

Future Outlook

Comprehensive Income

24

Company's Products Value Chain

132

Statement of Changes in Equity

25

Pestel Analysis

Information Technology Governance

133

Statement of Cash Flows

26

Competitive Landscape and

93

Information Technology Governance

134

Notes to and Forming Part of the

Market Positioning

Financial Statements

26

Significant Changes from Prior Years

Stakeholders Engagement

27

SWOT Analysis

94

Stakeholders Engagement

Consolidated Financial Statements

27

Calendar of Major Events

185

Independent Auditor's Report

Analysis of Financial Information

to the Members

Governance

98

Financial Statistical Summary

190

Consolidated Statement of

28

Board of Directors

100

Financial Highlights

Financial Position

34

Board Committees

103

Share Price Sensitivity Analysis

192

Consolidated Statement of

35

Company Information

104

Analysis of Financial Statements

Profit or Loss

36

The Management

105

Composition of Statement of

193

Consolidated Statement of Profit or

38

Management Committees

Financial Position

Loss and Other Comprehensive Income

40

Chairman's Review

105

Segmental Review of Business

194

Consolidated Statement of Changes

42

Directors' Report

Performance

in Equity

58

HSEQ Policy

106

Statement of Value Addition

195

Consolidated Statement of Cash Flows

59

Energy Policy

106

Statement of Charity Account

196

Notes to and Forming Part of the

60

Human Resource Policy

108

Vertical Analysis

Consolidated Financial Statements

62

Whistle Blowing Policy

110

Horizontal Analysis

63

Gender Diversity Policy

112

Statement of Contribution &

Notice of AGM & Proxy Form

65

Code of Conduct for Protection against

Value Addition

247

Notice of Annual General Meeting

Harassment at Workplace

251

Ballot Paper

67

Business Process Re-Engineering

267

Research & Development

268

Glossary

70

Other Corporate Governance

269

Proxy Form

271

Proxy Form (in Urdu)

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Attock Refinery Limited published this content on 18 September 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 18 September 2023 06:19:06 UTC.