PACRA Maintains Entity Ratings of Pak-Arab Pipeline Company Limited

Pak-Arab Pipeline Company Limited (“PAPCO” or the Company) ratings reflect its unique monopolistic position as Pakistan’s sole dedicated pipeline transporter of High-Speed Diesel (HSD) and Motor Gasoline (MOGAS), serving the southern-to-central consumption corridor, including key inland markets, which together account for approximately 60% of national petroleum consumption. The ratings are underpinned by a regulated tariff framework that ensures stable and predictable revenue streams, largely insulated from commodity price volatility; a strong government-linked ownership structure providing implicit sovereign support from both the Government of Pakistan and the Government of Abu Dhabi through PARCO; and near-complete deleveraging supported by strong free cash flow generation. During FY25, the Company’s throughput increased to approximately 5.2 million MT from 3.9 million MT in FY24, reflecting strong capacity utilization. Consequently, revenue grew by 32.7%, while net profit rose to PKR 7.48bln (FY24: PKR 6.6bln). Working capital is supported by strong internal cash generation, while leverage continues to improve, declining to 9.4% as of March 31, 2026, reflecting a strengthening capital structure. The USD 25mln foreign currency loan has been fully repaid as of FY25, while approximately 14.3% of the PKR 11.8 billion MOGAS upgrade loan remains outstanding. The equity base continues to expand, supported by disciplined liquidity management with investments maintained exclusively in short-tenor Government of Pakistan Treasury Bills, collectively indicating a steadily strengthening financial profile. Going forward, the Ministry of Energy (Petroleum Division), in its April 1, 2026, directive, increased PAPCO’s MOGAS transportation share via the White Oil Pipeline from 60% to 70% under a gradual transition plan, further strengthening throughput momentum and enhancing revenue visibility.
The ratings draw comfort from a regulated tariff framework ensuring stable revenues, structural barriers to entry supporting long-term operational continuity, and a government-linked ownership structure (Government of Pakistan and Government of Abu Dhabi via PARCO) providing strong implicit sovereign support and reinforcing credit strength. The operational profile is further strengthened by the increase in MOGAS transportation mandate to 70% effective April 2026 and ongoing pipeline upgrade initiatives, supporting a positive medium term throughput trajectory. A strong financial and operational profile is sustained by ample liquidity and a robust balance sheet, providing room for future expansion.

About the Entity
Incorporated as a joint venture, Pak-Arab Pipeline Company Limited was established to own and operate the White Oil Pipeline (WOP), a 786 km, 26-inch diameter cross-country pipeline commissioned in March 2005 for USD 480 million, connecting Karachi’s seaports (Port Qasim and Kemari) to Mahmood Kot in southern Punjab. Following a USD ~110mln upgrade completed in November 2021, the pipeline now transports both HSD and MOGAS simultaneously, with a capacity of 8 million MT per annum, expandable to 12 million MT. The shareholding comprises PARCO (62%), Wafi Energy Pakistan Limited (26%), and Pakistan State Oil Company Limited (12%). The Company is governed by a ten-member Board of Directors. Mr. Hamed Yaqoob Sheikh, Federal Secretary, Ministry of Energy (Petroleum Division), serves as Chairman. Mr. Kashif Siddiqui is the Chief Executive Officer with over 27 years of experience in the energy sector, and Mr. Ali Muhammad Mahenti (FCA) serves as Chief Financial Officer.