Pakistan Refinery’s Expansion Project Stopped Due to Dollar Shortage

The Pakistan Refinery Limited (PRL) expansion project has been stalled due to a lack of US dollars, which has delayed payment to Wood Group UK Limited (Wood).

Wood was supposed to receive $25 million for the refinery expansion and upgrade project (REUP), but the payment could not be made for several months due to a lack of dollars in the country, according to a national daily.

The contract for payment to a foreign firm is registered with the central bank, and the payment is made through the central bank after the local company deposits the amount in the bank.

A dollar shortage has caused a delay in payment to the UK contractor hired for front-end engineering design (FEED). The payment delay to PRL’s UK contractor has also been confirmed by PRL management. “Yes, there is a delay in contract payment,” Zahid Mir, PRL’s CEO, confirmed to a national daily.

He also stated that efforts were being made to resolve the issue, as the contractor was in contact with the Pakistan government through the British High Commission in Pakistan. He was hoping that the situation would be resolved soon.

The contract was signed in May of last year, when PRL appointed Wood Group as the FEED contractor for the refinery expansion and upgrade project.

Pakistan has been pursuing an energy plan that encourages local refineries to expand and improve their crude processing capacities in order to reduce the country’s reliance on imported petroleum products and preserve the country’s valuable foreign exchange reserves.

Having said that, the aforementioned development will strengthen and expand synergies between Pakistan State Oil (PSO) and PRL. By reducing imports, the project would also help the country’s balance of payments. The capacity of PRL’s crude processing plant will be increased from 50,000 to 100,000 barrels per day, and the refinery will be converted from hydro skimming to deep conversion.


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