Aramco Partnership Boosts Gas and Oil Pakistan Limited’s Ratings

Lahore: The Pakistan Credit Rating Agency Limited (PACRA) has upgraded the ratings for Gas and Oil Pakistan Limited (GO), recognizing the company’s robust financial footing and strategic partnership with Aramco. Aramco’s acquisition of approximately 40% of GO marks a significant development in Pakistan’s oil marketing company (OMC) sector. This partnership is expected to transform the landscape of the industry and enhance GO’s operational capabilities.

GO operates an extensive network of around 1,293 retail outlets, including 55 company-owned and operated sites, eleven of which have been rebranded with the Aramco name. The company boasts the second-largest storage capacity in its sector, with approximately 205,038 metric tons, and earns additional income from hospitality services.

The company focuses on procuring petroleum, oil, and lubricants from both local and international markets and is involved in their storage, distribution, and marketing. GO has positioned itself among the leading players in volumetric sales, maintaining stability in its business and financial risks. With an increase in its topline and profits, GO’s performance is expected to remain sustainable despite challenges from lower volumes due to weak demand and regulated pricing.

A significant equity injection by Aramco through a rights issue has bolstered GO’s financial structure, streamlining working capital challenges and reducing reliance on borrowings. This has led to improved coverage ratios, providing an additional financial cushion.

Aramco’s involvement has also strengthened GO’s governance framework, with Aramco representatives taking roles on the board and in key managerial positions, positively influencing the company’s operations and ratings. Looking forward, GO plans to invest in Pakistan’s food sector and introduce Aramco’s lubricant brand, Valvoline, into the market, further enhancing its portfolio.

The upgraded ratings reflect the anticipated growth trajectory from the Aramco partnership, alongside the realization of governance and control improvements.