PARCO expands its horizons

We are facing some key challenges. The first one is the law and order situation that we have, which adversely affects everything. Secondly there is a shortage of energy which drives the entire economy. Without energy there is no industrial development and existing businesses also run inefficiently. The priority should be that we should fix the energy issue first and make investments in the country that create jobs and then the law and order problem would also improve as a consequence. Our law and order situation has also been exaggerated out of proportion, so it is very important that we also correct this picture. Pakistan does have its problems but they have been blown out of proportion.
 

Much of the bad news about Pakistan in the local and international media is not true. The country is not in chaos. You cannot get the true picture until you come to Pakistan, until you visit the industry leaders and talk to them and find out that we have good management and technical professionals performing on world class standards in almost every area, say it be services, manufacturing, etc. The world needs to study more of our business cases and success stories that have been happening from quite some time and continue to happen today. 
 

First, let me tell you what PARCO is. PARCO started as a small pipeline company in 1974.  That small pipeline was from Karachi to Multan with a capacity of 2 million tones. Over the years we have expanded from that small start. The pipeline was first expanded to 4.5 million tones, more than double the original capacity. It was extended from Multan to Lahore. In 2,000, we put up the refinery at Multan. With our JV partners, we put up another pipeline that goes from Port Qasim to Multan for the transportation of white oil products. The older pipeline carries crude for the refinery and the new pipeline carries high speed diesel from Karachi to Multan and then further to Faisalabad and Machike near Lahore meeting upcountry demand. 
 

In 2012 we acquired SHV Energy Pakistan, which was a subsidiary of SHV of Holland. It was, and still is, the largest LPG marketing and distribution company in Pakistan. The company’s profitability wasn’t all that good the years preceding our acquisition, but due to our professional approach, within one year, it became a profitable company and we even achieved payback of our investment. 
 

PARCO has a joint venture with Total of France in the retail fuel sector. Recently, Chevron, which is a leading Oil Marketing Company in Pakistan, announced that it is interested in selling its fuel marketing business in Pakistan. We, along with our JV partners TOTAL, decided that we should avail this opportunity and acquire Chevron’s fuel marketing business. By doing so, we will expand our network from 300 retail outlets to 800 retail outlets throughout Pakistan. In this highly competitive bidding, in which 7 or 8 other organizations also participated, we were the successful bidders.  
 

We are also planning to setup another refinery, the Khalifa Coastal Refinery, which would be larger than our existing refinery and would be Pakistan’s largest and most modern refinery. So, you see, despite all negativism and the perception of media, there is a huge potential for investment in Pakistan, especially in the oil and gas sector, and it does pay off provided investments and projects are managed professionally.
 

Pakistan State Oil (PSO) is the largest and Shell is the second largest. So we would be at number 3 but very close to Shell. PARCO now is not just an oil refinery or a pipeline transportation company, rather, it is an integrated energy company. 
 

Investors have to trust the management, their technical and managerial capacity, their integrity and their judgment. If they know that their money is managed properly and with care they would be happy to invest. All these years, we have created trust with our investors. International Petroleum Investment Company (IPIC) of Abu Dhabi is one of the largest investment companies in the world and despite the present low margins in the refining sector, IPIC is determined and happy with its share of investment in PARCO. 
 

PARCO is an icon of success that offers unmatched benefits to its owners, employees, stakeholders, business associates, the community in which it operates and above all, the country. The modular growth strategy adopted by PARCO ensures that investments are synchronized in such a manner that completion of one project overlaps with the beginning of another.

Answering to your query about our strategy for the Khalifa Coastal Refinery project, we will be ensuring that it is setup for catering not only to the current demand of the country, and exports, but also for expansion in the longer term. Our successful management of PARCO and the experience we have in managing refining operations will prove invaluable for the running of the Khalifa Coastal Refinery.
 

We also have to be mindful to the fact that in many parts, the world is starting to shift from oil to gas. LNG and shale gas developments are taking place in a big way. America, which is the largest consumer of crude oil and largest consumer of furnace oil is slowly shifting to gas. Demand and supply impact profitability. As technology catches up, other countries will also be shifting from crude oil to gas. Technology is also becoming more competitive as we have seen in hybrid cars, wind and solar. In the long run the emphasis on oil may decrease.
 

Our vision is to be a leading national energy company of choice, not just oil refining and transportation. Our strategies and mission are based on this vision. Diversification of our portfolio, while remaining in the energy sector, is a key part of our strategy to ensure we manage risks relating to changing local and global energy trends. Acquisition of the LPG company was also a case of diversification and vertical integration. We are the largest producer of LPG in the country and acquiring the largest LPG marketer made business sense. The quick payback on this investment has further increased the level of trust in our investors.  
 

We had planned to setup a large power plant based on furnace oil that our Mid-Country Refinery produces. This sort of business model for a power plant has distinct advantages to the synergies available in the refining and power plant operations. However, the Government of Pakistan does not want any additional power plants based on furnace oil. They want power plants based on coal, hydro, gas or alternate energy like wind and solar. We are still assessing possible investment in this sector given the current fuel sources and their economics for us.
 

We already have a technical agreement with UOP, which is based in Gilford, UK. Under the agreement, UOP shares new technology with PARCO and whenever we have any technical problems we seek their consultancy. At PARCO, we believe that in order to remain competitive, we must constantly upgrade and improve ourselves. Besides, we believe in inducting the latest technology and new plant and equipment, we have added in our refinery, the diesel hydrodesulphurization project and the asphalt plant.

What are your main CSR projects sir?

 

Our Schools and Clinics Support Program provides assistance to 62 institutions throughout our neighboring communities, of which 48 are schools where more than 11,000 children are directly benefiting from this program. We have also made partnerships with reputable NGOs like The Citizens Foundation and have developed three schools in two different villages near our installations and Mid-Country Refinery.

There are 833 children receiving quality education at these three schools. Apart from this, we are also supporting vocational training centers where men and women are being trained to gain different sets of skills which can be used further to promote their entrepreneurial ideas and lead them towards sustainable incomes. We also believe in social accountability and reporting, and as an active member of the United Nations Global Compact, we are reporting since 2010, our CSR progress every year, diligently. 

 

We have about 2,000 kilometers of pipeline network from Karachi to Machike near Lahore with various stations and terminals. This makes us neighbors to many underprivileged communities.

Our priority is to help these communities by providing basic necessities like, education, health, quality environment, safe drinking water, etc. Keeping in view the unemployment rate amongst such communities, we have initiated an entrepreneurship program under which we have helped various vocational training institutions. In some we have set up state of the art computer laboratories with latest computers and multimedia. We have also hired trainers for these labs who conduct quality training programs.

We have also setup labs for conducting electrical and mechanical courses provided sewing machines and conducted sewing and embroidery courses for rural women. All three have to go together, the student, the equipment and the teacher. If any one of these elements is missing the value chain is not complete. We have been working hard to empower rural women. For the last two years we have been supporting adult literacy centers in rural areas near our Mid-Country Refinery where uneducated women are provided basic education. So far 500 women have been provided education. This initiative has helped women in improving their living standards, hygiene and health.  
 

PARCO is a fully IMS Certified Energy Company and amongst the first in Pakistan to simultaneously achieve three international certifications ISO 9001:2008 (Quality Management System), ISO 14001:2004 (Environmental Management System) and OHSAS 18001:2007 (Occupational Health and Safety Management System). Impact on the environment from the refining process is controlled by treating and managing emissions.

PARCO’s Mid-Country Refinery, Stations and Terminals have designated Health, Safety and Environment procedures as per international best practices. We have an effluent treatment plant at Mid-Country Refinery with a capacity to treat 340 cubic meters per hour of wastewater which is reused for irrigating plants and is discharged after compliance with National Environmental Quality Standards (NEQS). 
 

During 2010, PARCO installed a Diesel Hydro Desulphurization (DHDS) plant, which is capable of producing low sulfur High Speed Diesel conforming to EURO II standards. PARCO is the only refinery in Pakistan to have achieved this capability. This product is helping EURO II compliant automobiles to perform better by being fuel efficient with low emissions.

Twice a year, the company performs third party ground water monitoring of areas surrounding the refinery and its corporate headquarters to ensure that the communities nearby are using safe underground water. We ensure that Personal Protective Equipment (PPE) is provided to all employees. Service Providers and contractors are also required to provide PPE’s to their staff. All employees and contractors at PARCO undergo orientation and training on occupational, health, safety and environment procedures and practices before they are mobilized. 

 

To ensure safe and healthy air quality, the company carries out ambient air monitoring surveys to detect any traces of hazardous gases. The efficient operation of PARCO’s 2,000km cross-country pipelines eliminates the movement of over 5,000 oil tankers on the roads, significantly contributing in reduction of air pollution. As a member of the World Wildlife Fund Pakistan, PARCO helps to create awareness, promote conservation of nature, and takes several initiatives for protecting the environment. Our social and CSR success is reflected by the proliferation of awards we have received over the years. In the last year alone, we received recognition in all areas, CSR, Finance, Human Resource, Environment, HSE, etc.  

 

As per our vision, I and my team would like to make PARCO the leading national energy company of choice for all stakeholders by employing a strategy of diversification and integration, with the right technology and adopting best industry practices for sustained competitive advantage. 
 

You are right. The company was incorporated in 1974 and I joined it in 1975. I have played my innings. My desire is that I should be able to handover the mantle to someone who is smarter than I am. That is what I am doing. I am trying to select and develop the best team members for the future. I am spending a lot of money on training because an organization is only as good as its people. You can have excellent infrastructure but if the right people are missing you cannot sustain that. 
 

It is very satisfying when you see something growing. You see I just said that from a small pipeline company now PARCO is one of the largest organizations of Pakistan. We have joint venture with TOTAL of France. We are acquiring Chevron Pakistan which is a world class company. It is very satisfying when you know that the company you are heading is growing and diversifying.