AMMAN -- Jordan Petroleum Refinery Company (JPRC) was authorised this week by its shareholders to raise the firm's capital by JD10 million, or 25 per cent, to JD50 million.
Shareholders, including the Social Security Corporation with a 20.4 per cent equity and the Islamic Development Bank at 6.2 per cent, will receive bonus shares at a rate of 25 per cent as the increase will be achieved through capitalising part of the retained earnings.
Chairman Waleed Mithcal Asfour wrote in the 57th annual report that the company intends to continue raising the capital gradually.
Chief Executive Officer Abdul Hadi Alawin told the shareholders during an extraordinary meeting on Monday that the company is in the process of appointing a financial adviser to help it determine the best approach for securing the financing for the fourth expansion project.
"In light of the recent changes, especially the pipeline project for exporting Iraqi oil through Jordan and the prospect of JPRC receiving supplies from it, the company will reconsider the priorities previously set, in particular the fourth expansion scheme," Asfour said in the report.
According to the chairman, this matter makes it imperative now to review previous studies and to update them with possible alternatives that correspond with the size of the expansion and its costs.
Asfour indicated that JPRC is now moving towards horizontal and not vertical expansion by setting up a number of conversion units aimed at transforming heavy fuel oil into light products such as gasoline, aviation fuel and gas.
JPRC is also establishing other units to improve the quality of oil products in order to bring down the investment costs to the lowest possible level.
In the forward to annual report, the chairman said the company is entering a competitive business environment that entails major challenges to upgrade performance, rationalise expenditures, and boost income.
He referred to a deal reached with the government in September 2012 that organised the relationship between the two parties and guaranteed JPRC a JD15 million annual profit excluding the lubricants and gas activities as well as those of the Company for Marketing Petroleum Products which is a firm wholly owned by JPRC.
Previously, JPRC established two other independent entities, one for gas filling and distribution, and the other for mixing, filling and distributing lubricants.
"After years of indecision, the government actually started in May 2013 to apply its energy strategy allowing two new competitors to compete in marketing petroleum products in addition to the JPRC one mentioned earlier," Asfour wrote, noting that the gradual liberalisation of the energy market will usher a fundamental change in JPRC's strategy in the coming years.
Under the deal with the government, JPRC is assured to sell 100 per cent of its products to the three marketing entities for a transitional period of six years before the market is fully liberalised.
Besides the decision to raise capital, the shareholders approved during an ordinary meeting the board's recommendation to distribute cash dividends at a rate of 15 per cent.
The annual report showed that JPRC sales amounted to JD4 billion in 2012, 15 per cent higher than the JD3.5 billion posted in 2011 due to higher volumes and sale prices of petroleum derivatives in line with the international crude oil prices.
According to the report, the oil price per barrel averaged $112 last year compared to $109 in 2011. This brought up the cost of imported crude oil by $78 million or JD55.5 million in addition to the higher cost ensuing from extensive consumption.
As a result, JPRC generated a JD25.8 million net pre-tax profit in 2012, 1.2 per cent higher than the JD25.5 million registered in the previous year.
The profit after tax was given as JD21.6 million, lower than the JD21.8 million in 2011.
The balance sheet as of December 31, 2012 showed total assets at JD1.5 billion (JD1.3 billion in 2011) mainly because of an increase in accounts receivables by JD188 million to JD991.7 million and inventory by JD35 million to JD424.4 million.
The income and loss statement showed that JPRC paid JD56.7 million (JD44.5 million in 2011) in interest and commission to banks and JD8.1 million (JD1.8 million) in fines related to general sales tax and special tax.
Other disclosures put the amount of capital investment in JPRC's activities at JD21.5 million.
At the end of last year, a total of 3,364 employees worked at JPRC. Of those, the education level of 1,577 workers or 47 per cent was below the general secondary level.
© Jordan Times 2013
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