The expansion project of Pakistan Refinery Limited (PRL) has hit a roadblock due to a shortage of US Dollars, which has delayed payment to Wood Group UK Limited (Wood).
According to a national daily, 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.
The contract is registered with the central bank for payment to a foreign firm, and the payment is made through the central bank after the local company deposits the amount in the bank.
The delay in payment of the UK contractor hired for front-end engineering design (FEED) has been caused by a dollar shortage. PRL management has also confirmed the payment delay to its UK contractor. “Yes, there is a delay in contract payment,” confirmed Zahid Mir, PRL’s CEO to a national daily.
He also added that efforts to resolve the issue were underway, as the contractor was in contact with the Pakistan government via the British High Commission in Pakistan. He hoped the situation would be resolved soon.
Pertinently, the agreement 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 in which local refineries are encouraged to expand and improve their crude processing capacities in order to reduce the country’s dependence on imported petroleum products and save the country’s valuable foreign exchange reserves.
That being said, the underlined development will strengthen and increase the synergies between Pakistan State Oil (PSO) and PRL. The project would also help the country’s balance of payments by reducing imports. PRL’s crude processing capacity will be doubled from 50,000 to 100,000 barrels per day, and the refinery will be upgraded from hydro skimming to deep conversion.