The Pakistan Credit Rating Agency (Pacra) has assigned the long-term rating of 'AAA' (Triple A) and short-term rating of '1+' (A One Plus) to National Refinery Limited. The ratings, applicable to the senior unsecured creditors of the company, denote the lowest expectation of credit risk emanating from exceptionally strong capacity for timely payments of financial commitments. The ratings reflect NRL's unique position in the domestic refining industry emanating from its virtual monopoly in the high margin lube business.
The company's low business risk is reinforced by its ability to change its product mix (both fuel and lube), owing to relatively higher operational flexibility. This enables the company to capitalise upon some demand-supply imbalances with the primary focus on value-added items.
The ratings also recognise the strategic vision of the company's forward-looking management, which has helped in achieving a sustainable improvement in overall operations. The ratings also take into account NRL's very strong financial profile emanating from virtually debt-free capital structure and robust liquidity. This substantially mitigates the element of financial risk.
Meanwhile, the profit retention policy has enhanced the risk absorption capacity of the company and this provides a cushion against any unforeseen contingencies.
NRL was incorporated as a public limited company at Karachi in 1963. Government of Pakistan (GoP) took over the management of NRL under the Economic Reforms Order, 1972. At present, NRL is under administrative control of the Ministry of Petroleum and Natural Resources, which is exercising control through its shareholding in State Petroleum Refining and Petrochemical Corporation (Perac). Its privatisation through the sale of 51 percent of equity, along with management control, is in process.
Due to the manner in which the refinery was constructed and expanded over the years, NRL effectively comprises three refineries. The three refineries are all located at the Korangi refinery site (263 acres) and include 1) Fuel Refinery, 2) Lube I Refinery, 3) Lube II Refinery, and 4) a BTX (Benzene, Toluene, Xylene) Plant. NRL has more than one-fifth share of the total refining capacity of the country with around 95 percent average capacity utilisation for the last few years.
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