The Pakistan Credit Rating Agency Limited
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Aman Zafar

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PACRA Maintains Entity Ratings of Pak Arab Refinery Limited

Rating Type Entity
Action Maintain Maintain
Long Term AAA AAA
Short Term A1+ A1+
Outlook Stable Stable
Rating Watch - -

The ratings reflect PARCO’s ownership structure- owned by the Government of Pakistan (GoP) (60%) and Abu Dhabi Petroleum Investments LLC (40%- a majority owned company of Emirate of Abu Dhabi) (EAD). Additionally, it enjoys strategic importance to the GoP for its socio-economic policies and its quest of reducing the import bill. The company’s low business risk emanates from its leading market position, strong demand of its products, and its advanced plant technology. The business fundamentals derive support from high premium product mix and diversified revenue stream. At the same time, the ratings recognize the company’s ability to manage its financial profile. Also reflected in the ratings is PARCO’s strengthened position in midstream and downstream sector with organic growth and acquisitions.

Effective management of upcoming projects, favorable regulatory regime especially and consistency in Government policies remain critical for the ratings. The ratings are dependent on sustained competitive positioning of the company.

About the Entity
PARCO, established in 1974, has evolved into a well-established name in the midstream and downstream oil chain. Apart from 4.5mln tones per annum refinery. It manages an extensive network of oil transportation pipelines under its name and through its subsidiary PAPCO. The pipeline network, sprawled across the country, includes the White Oil Pipeline, used for transportation of crude oil and refined products. Over the time, PARCO has established its presence in the Oil Marketing industry through TOTAL PARCO Pakistan Limited (TPPL), which has also acquired Chevron’s fuel business and has become 3rd largest Oil Marketing Company.

PARCO has made investment in its related business;
a) PAPCO - 51%: Operates a state-of-the-art cross-country pipeline system to transport refined High Speed Diesel from Karachi ports to up-country.
b) PARCO Pearl Gas (Pvt) limited - 100%: Engaged in marketing and distribution of LPG.
c) Total PARCO - 50%: TOTAL PARCO has emerged as the growing oil marketing company in the domestic market.

Further, Pak-Arab Refinery Company is also planning to establish deep conversion coastal refinery with capacity to refine crude oil up to 250,000 barrels per day at the Khalifa Point near Hub in Balochistan. The project is currently in the feasibility phase.

The company’s ten-member BoD includes six nominees of GoP, including the Chairman and the MD, while the remaining four represent EAD and OMV. The Managing Director, Mr.Tariq Rizavi, has been associated with the company since beginning of his career and is supported by a team of qualified and experienced professionals

The primary function of PACRA is to evaluate the capacity and willingness of an entity to honor its obligations. Our ratings reflect an independent, professional and impartial assessment of the risks associated with a particular instrument or an entity. PACRA's comprehensive offerings include instrument and entity credit ratings, insurer financial strength ratings, fund ratings, asset manager ratings and real estate gradings. PACRA opinion is not a recommendation to purchase, sell or hold a security, in as much as it does not comment on the security's market price or suitability for a particular investor.