Strategic sale of 51 per shares of the National
Refinery Limited (NRL) is estimated to bag an attractive price on the
back of extra ordinary financial results achieved during first 9
months of the current financial.
Informed sources told PAGE that a hot
contest is anticipated amongst 7 short listed contenders at the
bidding which is likely to be called on May 31. The government is
off-loading 51 percent of stake which comes to around 33,985,788
shares each at a tentative price of Rs370/, however, the actual worth
would be known after the event.
Though the National Refinery is the only refining
sector owned by the state which is a going concern showing handsome
earnings with a bright future outlook, yet its privatization confirms
the firm commitment of the present government that doing business was
not the job of the government, hence it is adhered to its agenda to
shift the responsibility of running state-owned corporation into the
private hands whether they are running in losses or making profits.
A breakdown of the financial results during first
nine months of the current financial year (July-March 2005) that its
financial results portrayed a mammoth 93% growth in earnings to Rs2.24
billion as against Rs1.16 billion during the corresponding period of
This translates Earning Per Share (EPS) at Rs33.56
as compared to Rs17.41 during previous year.
Generally speaking, the sales of different products
during the said period were up 49% to Rs43.55 billion with gross
margins improved by approximately 3pps. This resulted in the company's
nine months gross profits to a quantum jump by over 2 times to Rs4.1
An impressive growth at 49% in NRL's sales ensued
from the dual impact of increased output as well as higher product
According to details, during the said period around
2.10 million tonnes of crude oil was processed which is 6.4% higher on
Production volumes of different grades of lube base
oil and asphalt respectively stood at 0.151 million tonnes and 0.179
million tonnes respectively.
Sources at NRL said that international oil market
was volatile while prices remained on the higher side during the
period. The refining margins were also favorable with significant
inventory gains, lower borrowing costs and growing demand for POL
products in the country.
Privatization Commission (PC) is likely to conduct
bidding for its 51% stake in National Refinery by May 31, 2005 in
which seven companies may participate.
In the first phase of the privatization process 11
parties were pre-qualified for NRL to acquire 51% strategic stake
against a list of 29 parties which had submitted Expression of
Interests (EOIs) for the transaction. The seven serious contenders
taking part in NRL's privatization are including Al Ghurair
Investments, Attock Oil Group, Fauji Foundation, KPC Holdings, Orient
Petroleum Inc Consortium, Pakistan Refinery Limited, GML Capital and
Consortium including National Refinery Employees Trust.
Currently, NRL is expanding its lube base oil
production base. The objective for expanding its lube base was to
enhance capacity by at least 20% at an outlay of approximately Rs one
According to informed sources, agreements have
already been executed with Exxon Mobil for the Dill-Chill process
license. The refinery has reported progress on the revamp project as
satisfactory. The best estimate for completion and commissioning of
the additional capacity is likely to be announced right on the
occasion of bidding obviously to give a rosy picture of future
business of the refinery.
Since the prices of Lube Base Oils (used to produce
lubricants by Oil Marketing Companies) are deregulated, the National
Refinery being the sole domestic LBO supplier is expected to reap
In view of the growing demand for LBO, the addition
into production capacity in technical collaboration with Exxon/Mobil,
the refinery is expected to produce 14,800 tonnes per year. The
enhanced production capacity will exclusively deal with high viscosity
bright stock grade of lube oil.
The successful buyers will enjoy the recently
completed captive power plant of the refinery which has a capacity to
generate 11 MW of power through its fuel oil and diesel oil based
power plants. The newly energized power plant was an added attraction
for the intended buyers which obviously ensure running the project
without any interruption on account of power breakdowns or
fluctuations. Moreover, higher income from lube refinery provides
space to the management to make a higher payout as there is no cap on
dividend distribution from the profits of this segment while fuel
refinery's earnings are subject to a maximum payout limit of 50% of
paid up capital.
Of the total shares, five government organizations
hold 54.33 percent of shares with the principal shareholders were the
PERAC, a state run organization holding over 16 percent shares,
National Investment Trust another stake holders enjoy 30.53, State
Life Insurance Corporation 6.91 percent, National Bank 1.54 percent
and Investment Corporation of Pakistan 0.74 percent. Islamic
Development Bank also holds 15 percent of NRL equity.