Government rehires bureaucrats on PARCO board

The federal cabinet reconstitutes the board of the strategically vital Pak-Arab Refinery Company for three more years, retaining a federal minister and all but one bureaucrat as directors.

The government has reconstituted the board of directors of Pak-Arab Refinery Company, retaining a federal minister and all but one bureaucrat as directors for a further three years. Out of the ten board seats, Pakistan holds the right to appoint six directors, whilst the remaining four seats are filled by the United Arab Emirates, which holds a 40 per cent stake in the company.

According to the federal cabinet’s decision, the government has retained all current Pakistani directors except for Jahanzeb Khan, who has been replaced by Rabab Sikandar Sultan, a grade-22 officer of the Pakistan Customs Service. Sultan’s husband, Sikandar Sultan Raja, the incumbent Chief Election Commissioner of Pakistan, has also previously served on the company’s board. Of the five reappointed directors, four are serving bureaucrats, two in their capacity as ex-officio members, and one is a federal minister. Secretary Petroleum Hamed Yaqoob Sheikh, who serves as the Chairman of the board, and Secretary Finance Imdadullah Bosal are the ex-officio directors.

The reconstituted board is scheduled to meet in Vienna, Austria, on 2 July, where board members are entitled to a 3,500 dollar fee per meeting. Whilst the prime minister has issued instructions regarding fees, the government’s directives are not legally binding on the board, as any alterations to financial compensation require formal board resolutions. The term of the previous directors expired on 21 May, prompting the federal cabinet’s approval for the new appointments. Under this reorganisation, Federal Minister for Economic Affairs Ahad Khan Cheema was reappointed for a three-year term, and Chairman of the Federal Board of Revenue Rashid Langrial was reappointed in a personal capacity rather than as secretary of the revenue division.

PARCO operates as a joint venture between the government of Pakistan, which holds a 60 per cent stake, and the Abu Dhabi Petroleum Investment Company. Due to the unique legal nature of the original participants’ agreement between the two states, the government has not formally declared PARCO a State-Owned Enterprise, meaning the SOEs Act of 2023 does not apply to it. Despite this distinct corporate status, the Ministry of Finance continues to monitor its operations and track its financial performance.

The finance ministry’s latest performance report highlighted significant operational challenges facing the refinery, noting a 60 per cent contraction in bottom-line profitability. Net profit after tax plummeted to 22.2 billion rupees in the 2025 fiscal year compared to 55.1 billion rupees in the 2024 fiscal year. Total net sales and services also decreased by roughly 15 per cent, dropping from 1.14 trillion rupees to 965 billion rupees. The ministry attributed this sharp decline to lower international crude prices, reduced local demand for diesel and furnace oil, and lower refinery throughput.

The state report further detailed that the company’s profit margins remain heavily exposed to global oil cycles due to a lack of oil hedging and a high dependence on imported crude, which heightens exchange-rate risks. Furthermore, rising finance costs in a high-interest-rate environment have eroded net margins, whilst major cash outflows from dividends during margin downturns have severely strained company liquidity.