Jordan Petroleum Refinery Company

Transcription

(A Public Shareholding Limited Company)
Amman -The Hashemite Kingdom of Jordan
54th Annual Report
For the Year Ended
31st December, 2009
2009
2
His Majesty King Abdullah II Ibin Al- Hussein
54th Annual Report
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4
His Royal Highness Crown Prince
Hussein Bin Abdullah II
54th Annual Report
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6
Contents
,
Company s Vision & Mission................................................................................ 9
Board of Directors................................................................................................. 11
,
Chairman s Statement............................................................................................ 13
Historical Brief...................................................................................................... 15
Fourth Expansion Project...................................................................................... 17
Analysis of Financial Position and Outcome of Activities.................................... 19
Review of Operations............................................................................................ 23
The Projects........................................................................................................... 47
Geographical Distribution of Locations................................................................ 54
,
The Company s Organizational Chart….......................................................…… 55
Other Explanatory Statements............................................................................... 56
,
The Board s Recommendations............................................................................. 57
,
Financial Statements for the Year Ended 31/12/2009 and the Auditor s Report.....61
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8
,
Company s
vision
,
Company s
mission
To be a Vibrant, Integrated & Diversified Regional Energy
Company admired for its Performance, Competitiveness,
Quality of Products and Services.
> Meeting the demand for energy in an economically,
environmentally, socially responsible and safe manner.
> Focusing on the constant innovation, adopting advanced technology to enhance productivity and
maximizing profitability.
> Expanding the company operations and diversifying
our range of activities through different partnerships
with reputable names to broaden company marketing network regionally.
> Developing the scientific and technical capabilities
of the company personnel, providing them with specialized training as well as incentives and rewards in
order to realize optimum results and achievements.
> Building value into the investments of the company
shareholders.
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10
Board of
Directors
Chairman
Mr. Adel Ahmed AL-Kodah
Deputy Chairman
Mr.Waleed Methcal Asfour*
Members
Mr.Wasef Yaqoub Azar
Mr.Omar Ashraf Al-Kurdi
Representative of General Social
Security Corporation
Representative of General Social
Security Corporation
Fund of the Engineers Association
Mr.Naser Sultan Shreideh
Eng. Abed Al-Rahim Boucai
Eng. Wael Akram Al Saqqa Representative of Pension
Dr. Jamal Mohammad Salah Representative of the Islamic
Development Bank-Jeddah
Majid Allan Representative of Al Samaha Real Estate Co.
Mr. Mohammad
Mr.Mohammad Eid Bundokji
Dr.Nabeeh Ahmad Salameh
Eng. Naser Falah Madadhah
Eng.Suleiman Abdel Razzaq Al-Daoud
Chief Executive Officer:
Dr.Ahmed Hussein Al Refai **
Eng.Abdel Karim Alawin ***
Financial Auditors:
Deloitte & Touch Company -Middle East –Jordan
*
Chairman duties during his absence since 7/1/2010 have been assumed by deputy chairman in
accordance with article 137/a Company›s Act.
** Contract of Dr.Ahmed Al Refai expired on 31/12/2009
*** Eng. Abdel Karim Alawin has been appointed as Chief Executive Officer from 7/3/2010
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Coporate Headquarter in Amman
12
Chairman’s Statement
j
Dear Honored Shareholders:
I am pleased to welcome you all to the 55th General Meeting to discuss the Company’s
achievements for the year 2009 and its future plans.
The company has continued to perform its duties to meet the needs of the Kingdom of various oil products under continued volatility of oil prices with an average price of $ 62 per
barrel of oil during the year 2009, compared with $ 100 per barrel in 2008, which had a
positive impact on cash flows for the company as a result of lower crude oil prices, which
constitute a main element in the cost of sales .
Despite these factors and by reviewing the financial statements of the company in 2009,
we note that the value of the company,s sales decreased by 24.3% as it reached JD (1,818)
billion, compared to JD (2,403) billion in 2008 , and that due to decrease in petroleum
products, sales prices in line with falling global crude oil prices despite the increase in sales
quantities which increased by 1.57% from the year 2008; However, the company achieved
a JD 13.2 Million as a net Profit before tax compared to JD 9.7 Million in 2008.,with a
growth of 36 % . Additionally, the company,s total assets fell to JD 534 million compared to
JD 542 million in 2008, mainly as a result of the decrease of JD (64) million in the Ministry
of Finance debit account caused by collection of due amounts received from the Ministry.
The company is continuing its enormous efforts to attract a strategic or financial partner
to enable it to implement the fourth expansion project, which aims to increase the refining
capacity and to produce high quality products in accordance with the latest international
specifications and to convert heavy fuel oil into light products of high value to enable the
company to compete in the open market.
On 1/9/2009 the council of Ministries decided in its Resolution No. 5954 to grant the company an exclusivity for 15 years, consisted of 5 years to implement the project and ten years
thereafter to serve the debt and all of that is subject to the ability of the company to attract a
strategic partner. The government directed the company to invite all interested investors and
those who showed interest to submit their bids for entering into strategic partnership in the
refinery. On 15/12/2009 the Council of Ministers decided to suspend all measures associated
with the resolution No. 5954 and formed a ministerial committee to study the procedures
that the refinery followed to attract the strategic partner and determine the conditions to be
developed by the government to grant exclusivity.
The company and the government agreed to renew the Service Agreement to import, store
and distribute oil derivatives which was signed on 25/2/2008 and was approved by the extraordinary general meeting of the company on 22/3/2008 till the end of 31/12/2010. Accordingly, the company paid JD 3 million to the Ministry of Finance as a settlement of 2008
,
profits and agreed to fix the company s refining and distribution profits for 2009 to be JD
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7.5 million after tax and exclude the profit of Lube oils activities plus an amount of 10
cents as extra profit for each barrel received from Iraqi oil .
Continuing company,s policy to expand its share in the market, the company bought four
gas stations, and is currently in negotiation with some other stastions owners in order to
purchase their stations. Moreover, the company intends to build more stations, and it has
bought some lands for this purpose.
I am pleased to inform you that, after reviewing the outcome of the Company,s performance
and net profits for year 2009, the Board of Directors recommends to the General Assembly
to approve the distribution of (25%) dividend of the paid capital.
In conclusion, I would like to express my thanks to our enlightened government for its
continued support to enable the Company achieve its mission and to all the parties that cooperated with the Company, and specially, the Ministry of Finance, the Ministry of Energy
and Mineral Resources, the Ministry of Industry and Trade, the Standards and Meteorology
Corporation, the General Directorate of Civil Defense and all other official bodies. I would
like also to express my thanks and appreciation to the Union of Petrol Filling Stations and
to the owners of the filling stations themselves and to the gas distribution centers as well as
the Jopetrol Lube Oil distribution centers for their continued cooperation with the Company.
In addition, I would like to express my thanks and gratitude to members of the Board of
Directors, The Company General Management and its employees, for their sincere efforts in
serving the Company.
I would like to seize this opportunity to express my deepest appreciation and gratitude for
your support and trust in the management of the Company, hoping to continue in serving our
Country under the patronage of His Majesty King Abdullah II, God bless him.
Waleed Methcal Asfour
Deputy Chairman of the Board of Directors
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Annual Report of the Board of Directors
Jordan Petroleum Refinery Co.
(A Public Shareholding Limited Company)
The Board of Directors is pleased to present to you its fifty fourth annual report including the most important activities and achievements of the Company, the Company›s
Financial Statements for the Year ended on 31st December 2009.
A Historical Brief
The idea of building a Refinery was first conceived by the Ministry of National Economy along with a Group of Jordanian businessmen in 1952.What prompted this idea, in
addition to the Kingdom’s need for fuels, was the passage of Tapline through Jordan.
The establishment of JPRC witnessed the following milestones:
> On 30/06/1956, The Council of Ministers granted the go-ahead to set up a refinery
in the Ha-shemite Kingdom of Jordan, and on 30/10/1957, The Council of Ministers
approved the Company,s regulation and the Company was registered in the Ministry
of Justice as a public limited company with a concession and with an issued share
capital of four million Jordanian Dinars to which the Government contributed 250
thousand Jordanian Dinars.
> On 16/11/1957, the Concession Agreement was signed between the Government
represented by the Minister of National Economy, the late Mr.Khulusi Al Khairi,
and Jordan Petroleum Refinery Company, represented by its then Chairman, the late
Mr.Abdul Majeed Shoman.
> On 10/2/1958, the concession agreement was endorsed by the Government and published in the Official Gazette (issue number 1373), on 03/03/1958.
> On 8/9/1958, The Board of Directors awarded a tender to construct a refinery to an
Italian Company, and on 9/10/1958 the agreement was signed to implement the
project that included the construction and running of a refinery with a daily production capacity of (1000) tons perday at a cost of approximately (3) million Jordanian
Dinars, also another tender was awarded to construct a pipeline of (8) inch diameter and a (43) kilometer long connecting the Refinery to the Tapline at a cost of
(235000) Jordanian Dinars.
> On 1/1/1961, the Company started producing different petroleum products .
> On 2/2/1961 the Jordan Petroleum Refinery was officially inaugurated by His Majesty the late King Hussein Bin Talal.
The Refinery through its lifetime had witnessed many expansion and development
projects, that included the following:
> Increased the Refinery,s capacity to (14000) tons per day through three expansion
projects, which were completed in (1970, 1973 and 1982,) raising the capacity to
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>
>
>
>
>
( (8700) ton per day and the throughput was subsequently increased to (14000) tons
per day in 1998 by the technical and engineering staff of the Refinery.
Construction and commissioning of lube-oil blending and packing plant in the year
1977 of ( 25000) tons per year capacity with the technical cooperation of Shell.
Construction and commissioning of LPG cylinders factory in 1976 capable of producing (100000) cylinders of (12.5) kg capacity per year. The plant incorporates
LPG cylinders maintenance facilities.
Construction and commissioning of crude-oil unloading station to handle crude
oil imported by road tankers in1986. The station is currently capable of handling
(15000) tons per day.
Construction and commissioning of three LPG cylinders filling stations in Zarka,
Amman, and Irbid in (1979 and 1989) capable of handling jointly (8400) cylinders
per hour. The stations were later expanded to handle (15600) cylinders per hour.
Increasing the storage capacity of the Company facilities in phases to reach 1581725
tonsin 2009.
Production, Import and Sales
> Quantities of petroleum products imported by the Company during 2009 amounted to (1075061) tons against (893098) tons in 2008, representing an increase of
(181963) tons or (20.37%)
> Quantity of crude oil processed amounted to (3643764) tons in 2009 against
(3820276) tons in 2008, representing a decrease of (176512) tons or (4.62%).
> The Company,s sales of petroleum products during 2009 amounted to (4421713)
tons against (4352426) tons in 2008, representing an increase of (69287) tons or
(1.57%).
The sale of petroleum products in 2009 compared with 2008 is as follows:-
*
*
*
*
*
*
*
Gasoline average sales increased by
Kerosene sales increased by
Diesel sales increased by
LPG sales increased by
Fuel Oil sales decreased by
Jet Fuel sales increased by
Asphalt sales increased by
16
(18.73%)
(11.06%)
(6.97%)
(5.37%)
(24.93%)
(6.97%)
(15.76%)
Fourth Expansion Project
Due to the growth in demand on petroleum products in the Hashemite Kingdom of
Jordan, the existing refinery can no longer meet the local market requirements. Considering the high cost of importing refined petroleum products from the international
markets by sea to Aqaba, handling, storing and transporting these products by tankers
to the consumption points in all parts of the Kingdom, taking into consideration that
the oil dock is unable to handle large quantities or various types of petroleum products
in addition to crude oil. Feasibility studies proved that the fourth expansion project
is necessary to be executed to meet the expected increase in demand (and to produce
products that are as a whole, in accordance with the latest international specifications)
and to be ready for competition in an open market.
Decline in demand on fuel oil started in the later part of 2003 as a result of the use of
natural gas in electricity generating plants. During 2006, natural gas reached central
and northern Jordan, and will eventually replace heavy fuel oil and diesel in power
plants. This will create a need to add conversion units to the existing Refinery to
convert cheap, surplus heavy fuel oil into valuable petroleum products like diesel,
kerosene, gasoline and LPG.
The forthcoming expansion project will include new units to produce petroleum products meeting the International Specifications as will as to enable the company to continue the production of unleaded gasoline but at a lower cost. Moreover, sulfur in
diesel will be less than (10) ppm compared to the current sulfur content of (1.2%) .
Furthermore, the expansion project will greatly improve performance of the refinery.
In 1998 Jordan Petroleum Refinery contracted the services of Kellogg Brown &Root
and Purvin & Gertz Companies to study the expansion of the Refinery. The study
had to be revised following the Government signing in 2000 an agreement to import
natural gas from Egypt. The Company commissioned Consulting firms lead by Atlas
Group (Taylor Dejongh, McCarthy Tetrault and Jacobs) to revise the earlier studies.
«Jacobs» completed the feasibility study of the fourth stage expansion project and
the financial advisor «Taylor DeJongh» studied the financing alternatives in addition
to other financial issues like assets evaluation, concluding that there is a need for a
strategic partner.
Based on that study, the company with a grant from the Japan Bank for International
Cooperation commissioned the Japanese companies Toyo Engineering Company and
Mitsui Company to study the best technologies available for licensors selection.
On 19/12/2005,The Company commissioned Citigroup as a financial advisor to prepare the terms of reference and to give financial advice as well as doing all necessary
steps to help find a strategic partner to help in financing the fourth stage expansion
project. Three international consultants (Technical, Legal and Accounting) have been
appointed to prepare a concise information memorandum, conditions of financing and
qualification documents. On the 15th of December 2006, the financial consultant sent
this concise information memorandum (Teaser Document) to (29) Foreign investors
from outside the Kingdom requesting from interested investors to send their replies
prior to 31st January 2007. Replies from twelve interested investors were received by
31st of January 2007. They were requested to pay refundable deposit of US 100,000
in order to provide them with Information Memorandum as well as a letter indicating
how they are going to submit their technical and financial offers. Five consortiums
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have deposited the amount required and as such they were provided with due information. They were asked to visit the Data Room which the company established in
cooperation with the financial advisor. The mentioned consortiums visited the Data
Room, met the management of the company, attended a management representation
and made a visit to the various sites of the company.
Based on the schedule prepared by the financial advisor, The company received two
offers from a consortium of the Future plans Co. and a consortium of Citadel Capital,
the offers were conditioned on obtaining an exclusive right and other requests, but the
government did not approve most of these requests because they were incompatible
with the government strategy for liberalizing the energy sector, which led to withdrawal of key members of the both consortiums. Therefore, the Board of Directors
decided to inform the consortiums of terminating the negotiations, in addition to that,
the company has developed an alternative plan in case efforts failed to attract a strategic partner to ensure the implementation of the expansion project by spontaneous
raising of the capital and assuring needed financing .
On 5/4/2009 a memorandum of understanding and information Non-Disclosure agreement was signed with INFRA (MENA) for three months exclusivity period to allow
them to conduct a study on the company,s status and the feasibility of implementing
the fourth expansion .
On 2/7/2009 INFRA(MENA) submitted financial, technical and legal offer within the
time frame and was transferred to the company,s internal and external consultants for
further studies and evaluations.
On 6/8/2009 a meeting was held by the committee that was formed on 15/6/2009
by a decision from the Prime Minister and their scope of work was to study the
time required for the exclusivty of the expansion program ,and on 10/8/2009 recommendations were submitted to the Prime Minister in accordance with the following
justification:1. To maintain the refinery as a national operating Company is a national strategic
goal because it is a safe and secure source to provide the Kingdom,s with its needs
of Petroleum products and it employs around (3600) Jordanian citizen and its
economic added value to the national economy, is high .
2. All offers of previous Investors for the partnership demanded exclusivity ranging
from 15-18 years (Including the period of implementation of the project).
3. Several countries have given an exclusivity period of not less than 15 years, including Turkey and others.
4. The withdrawal of the former bidders indicated the need to provide the best incentives that can attract investors especially in light of the global financial crisis
which led to difficulties in obtaining finance and the hesitancy of investors to invest in huge capital projects.
5. Risk associated with cash flow of the project is relatively high compared with
some other strategic projects, which requires assurance by the government to the
investors through granting the exclusivity .
6. Prices will be determined according to the specific and approved mechanism, and
there are technical controls to ensure the quality of the products is in accordance
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with international specifications . On the other hand, distribution of products to
consumers are mostly carried out by other companies.
7. All companies which had interests in strategic partnership with the refinery subjected their offers to obtaining the exclusivity. The exclusivity becomes more
necessary in the light of global economic crisis and the scarcity of funding as a
result of banks, difficulties to grant loans and this was confirmed by the financial
advisor (Citigroup) in their letter dated 15/8/2009.
On 10/9/2009 the decision of the Council of Ministers resolution No. 5954 issued on
1/9/2009 granting an exclusive period for (15) years conditioned with the company
to attract a strategic partner , and to enable the company to negotiate and attract interested investors on this basis.
On 28/9/2009 The company asked both the financial advisor (Citigroup) and the legal
advisor (Norton Rose) to study the Council of Ministers decision and how to attract
interested investors and in the meantime giving priority to the Jordanian investors,
either through strategic partnership or through issuing shares to the public .
On 30/9/2009 the Board of Directors took the decision to entrust the financial advisor
(Citigroup) to send expression of interest invitations to investors who had expressed
interest in entering as a strategic partner and they were (12), and to clarify the conditions stated in the Council of Ministers decision .
On 16/10/2009 the financial advisor sent a memo to inform (15) investors who were
interested, that the last date for receipt of the expressions of interest letters, was extended from 30/10/2009 to 27/11/2009.
On 15/12/2010 the Council of Ministers decided to suspend resolution No. 5954 and
to set a ministerial committee to study the procedures that had been followed by the
refinery to attract a partner and the conditions for granting exclusivity.
Analysis of the Financial Position and Outcome of Activities in 2009
The instability of the crude oil prices continued during the year 2009, the average
price per barrel of oil reached ($62), compared with an average price of ($ 100) during
the year 2008. The decrease in the imported petroleum products prices and Lube oils
had lowered sales value and cost of sales The government continued its subsidy by
fixing the price of LPG at JD 6.5 per cylinder during the entire year.
In accordance with the arrangements that had been followed since 1983 until the expiry date of the concession on 2/3/2008, any excess or deficit achieved as a result of
the company,s actions is debited or credited to the MOF account and adjusting the
cost of crude oil .The services agreement was signed between the government and the
company on 25/2/2008 to continue subsidy of LPG at the expense of the Treasury
and in the same way
The Following is a concise analysis of the costs and income for the year 2009 as
compared with 2008:-
1-Sales
Comparing Company sales for 2009 with those for 2008 showed that the Company
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sales value decreased from JD (2403) million in 2008 to JD (1818) million in 2009
representing a decrease of JD (585) million. The decrease in the sales value is due
to lower petroleum products selling prices in line with falling in crude oil prices
globally, despite the increase in sales volumes by 1.57%.
2-Crude Oil
The actual cost of crude oil used in production decreased from JD (1973) million
in 2008 to JD (1181) million in 2009 representing a decrease of $ (792) million due
to lower crude oil prices by 38% in addition to the decrease in quantities produced
by 3.59%
3-Imported Petroleum Products
The cost of imported petroleum products decreased from JD (539) million in 2008
to JD (495) million in 2009 representing a decrease of (44) million JD ( despite the
increase in the quantities imported by ( 20.37%) because of the declining in the
global prices of these items during the year in line with the fall in crude oil prices
globally.
4- Costs
Industrial costs increased from JD (58) million in 2008 to JD (58.4) million in 2009,
representing an increase of JD (0.4) million as a result of the increase in maintenance and spare parts expenditures for the refinery units
As for the selling and distribution expenses, it increased from JD (20.3) million
in the year 2008 to JD (23.7) million in 2009, an increase of JD (3.4) million ,as a
result of increasing in staff costs because of the amendments on the disability and
death program .
Administrative expenses increased from JD (7.8) million in 2008 to JD (9.4) million in 2009 representing an increase of JD (1.6) million as a result of the increase
in staff costs.
Bank interests on loans decreased from JD (23.4) million to JD (12.8) million in
2009 a decrease of JD(10.6) million due to the decrease in the volume of credit
facilities utilized due to the low burden of financing the purchases of crude oil and
derivatives; in addition to lowering the debt balance of Ministry of Finance and
low bank,s interest rates in 2009.
Also, other non-recurring expenses decreased from JD (12.1) million to JD (8.4)
million, a decrease of JD(3.7) million due to the settlement of concession agreement termination which amounted to JD (7.5) million in addition to recording of
JD (4.2) million as expenses of revenue stamps penalty in 2008 which was 50%
of revenue stamps penalty recollected in 2009. On the other hand, (3) million JDs
were recorded in 2009 as final settlement of 2008 profits in addition to setting up
(5) million JD as additional lawsuit provision.
The Balance Sheet
Comparing figures of the balance sheet for 2009 with 2008 shows that the balance
20
sheet total figures decreased from JD (542) million to JD (534) million, representing
a decrease of JD (8) million.
Following is a concise analysis of the assets and liabilities items on 31/12/2009 as
compared with 2008.
< Current Assets and Liabilities
Accounts receivable and other debit balances decreased from JD (244) million in
2008 to JD (170) million in 2009, representing a decrease of JD (74) million, which
was mainly due to a decrease in the debit balance of the Ministry of Finance by JD
(64) million .The value of inventory increased from JD (246) million to JD (283) million representing an increase of JD (37) million as a result of increase in the crude
oil and other petroleum derivatives stock, in addition the value of deferred tax assets
reached (6.2) million dinars, compared with (6.3) million dinars in 2008.
The decrease in current assets were offset by a decrease in the banking facilities which
decreased from JD (233) million in 2008 to JD (186) million in 2009 representing
a decrease of JD (47) million, in addition to higher balances of creditors, which rose
from (219) million dinars in 2008 to (252) million dinars in 2009, an increase of (33)
million dinars.
< Fixed Assets
The book value for Fixed Assets increased from JD (267) million in 2008 to JD (277)
million in 2009 representing an increase of JD (10) million while the accumulated
asset depreciation had increased from JD (235.1) million to JD (242.6) million representing an increase of JD (7.5) million with a net increase in the net book value from
JD (34.6) million in 2008 to JD (59) million in 2009 representing a increase of JD
(24.4 ) million due to the constructions of LPG, gasoline and jet fuel storage tanks.
< Shareholders Equity
The statutory reserve account increased from JD (17.8) million in 2008 to JD(18)
million in 2009 giving an increase of JD (0.2) million due to the settlement of the
excess profits for the years 2006, 2007 until 2/3/2008 by 1.1 million dinars against an
increase in the reserve by 1.3 million dinars, which is due to deducting (10%) of net
profit as stated in the Company,s act No.(22) for the year 1997 and the amendments.
The change in fair value of Investments held for sale had increased from JD (3.6) million in 2008 to JD (4.5) million in 2009 representing an increase of JD (0.9) million as
a result of the increase in the shares value owned by the Company, as stated in standard (39) of the International Accounting standards, although, the cost value for these
shares is JD (338047) only. Retained earnings had increased by JD (3.1) millions due
to achieved earnings after 2008 dividends . As a result, the value of shareholders equity increased from JD (65.3) million in 2008 to JD (69.5) million in 2009 giving an
increase of JD (4.2) million.
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The effects of these changes on the financial position
As a result of the above changes, the cash in hand increased by JD (3.9) million
reaching JD (10.7) million in 2009 compared with JD (6.8) million in 2008. The main
reason for the rise in Monetary Fund and the drop in credit facilities utilized by JD 48
million was due to lowering the debt balance of Ministry of Finance by (64) million
JDs and account receivables by JD 10 million , in addition to the increase in the creditors accounts by JD 32 million.
22
REVIEW OF OPERATIONS
1. IMPORTS
A. Crude Oil
Quantities of crude oil supplied to the Company during 2009 amounted to
(3631197) tons against (3687027) tons in 2008, showing a decrease of (55830)
tons or (1.51 %).
B. Petroleum Products
The Company processes crude oil producing different petroleum products needed
by the Kingdom and meeting the Jordanian Standard Specifications. The Company pursues a yearly production policy, which aims at striking the right balance
between production and imports to meet the local demand, and to best serve the
national economy.
Petroleum products quantities imported during 2009 amounted to(1075061) tons
against (893098) tons in 2008, showing an increase of (181963) tons or (20.37%).
The following table shows the petroleum products quantities imported in 2009
compared with 2007 and 2008.
Quantities in tons
Imported
Products
2007
2008
2009
Percent Change
2009/2008
LPG
233479
195856
235738
20.36
Diesel
429005
344352
438821
27.43
Fuel Oil
-
90715
-
-
Gasoline
166444
140631
230778
64.10
Avgas
793
1179
1037
12.05
MTBE
56276
120365
168687
40.14
Total
885997
893098
1 075 061
20.37
C- Base Oils
The quantities of base oils imported by the Company during 2009 amounted to
(20765) tons against (14480) tons in 2008, showing an increase of (6285) tons or
(43.4%).
54th Annual Report
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2. PRODUCTION AND
REFINING
A. Different Petroleum
Products
The Company maintained its
past production policy which
aims at realizing an optimal
economic balance between
crude oil refining operations
and petroleum products imports to meet all the Kingdom›s
needs with high economic efficiency. The Company,s production of petroleum products
amounted to ((3538605 tons in
2009 against (3670328) tons in
2008, showing a decrease of
(131723) tons or (3.59%).
- The following table and
graph show development of
the Company,s production of
petroleum products during the
years (2006-2009) in ton compared with the base year 1961:
view of the Refinery Process units
Product
LPG
1961
2006
2007
2008
2009
Percent Change
2008/2009
615
125140
107253
120155
106489
-11.38
37179
648261
678428
740488
756626
2.17
-
300698
290517
298656
308212
3.19
Kerosene
39620
131376
139065
104657
80989
-22.62
Diesel
41209
1324088
1212689
1236206
1172852
-5.13
Fuel Oil
50605
1318399
1204750
1002416
919494
-8.28
Asphalt
11897
167334
155425
167750
193268
15.21
-
1808
1189
-
675
-
181125
4017104
3789316
3670328
3538605
-3.59
Gasoline
Jet Fuel
White Spirit
Total
24
1400
١٤٠٠
١٤٠٠
١٢٠٠
1200
١٢٠٠
LPG
Gasoline
Avtur
Kerosene
Diesel
Fuel Oil
Asphalt
White Spirt
١٠٠٠
1000
١٠٠٠
800
٨٠٠
٨٠٠
٦٠٠
600
٦٠٠
٤٠٠
400
٤٠٠
٢٠٠
200
٢٠٠
0
١٩٦١
١٩٦١
1961
٢٠٠٦
٢٠٠٦
2006
٢٠٠٧
٢٠٠٧
2007
٢٠٠٨
٢٠٠٨
2008
B. Lubricating Oils (Jopetrol)
٢٠٠٩
٢٠٠٩
2009
The Company produces more than (100) different grades of lube oils of the highest
quality under the trade name of (Jopetrol) to meet most of the local market requirements.
All products comply with the Jordanian specifications, the American Petroleum Institute (API) standards, the Society of Automobiles Engineers (SAE) standards, European standards, and the American Army Military standards (Mil.). The products
are subjected to the most stringent quality control tests carried out in specialized
modern laboratories.
Lube oils factory
54th Annual Report
25
Jopetrol lube-oils maintained the ISO 9001:2000 quality management certificate
where its quality system is periodically inspected by the Lloyds Register committee that originally awarded the certificate. This achievement was realized due to total compliance with international quality standards that reflects the high standards
adopted by Jopetrol in production, testing and marketing. This gives a boost and a
strong incentive to the national industry to introduce itself to the foreign markets
by complying with high level of performance and services and its commitment to
follow international standards and specifications.
The Jordanian Company for The Manufacturing of Lube Oils registered as a wholly-owned subsidiary of the Jordan Petroleum Refinery Company with a capital of
3 million dinars, paid (50%) on 28/5/2008 has not exercised their activities yet.
Production in 2009 by blending and canning lubricant oil amounted to
(17046) tons against (14055) tons in 2008, showing an increase of (2991)
tons or (21.28 %).
The following table and graph reflect the development in lube-oils production for
the last four years compared with the initial production year 1977: -
‫ﺍﻧﺘﺎﺝ ﺍﻟﺰﻳﻮﺕ ﺑﺎﻟﻄﻦ‬
year
1977
Production
1191
2006
2007
14125
16471
2008
2009
Percent
Change
14055
17046
21.28 %
١٨٠٠٠
18000
16000
١٦٠٠٠
14000
١٤٠٠٠
12000
١٢٠٠٠
10000
١٠٠٠٠
٨٠٠٠
8000
6000
٦٠٠٠
4000
٤٠٠٠
2000
٢٠٠٠
0٠
1977
١٩٧٧
2006
٢٠٠٦
26
2007
٢٠٠٧
2008
٢٠٠٨
2009
٢٠٠٩
C. LPG Cylinders
During 2009, the LPG cylinders factory repaired and painted (76900) cylinders
compared with (55686) in 2008; also (126586) valves were replaced in 2009 compared with (123977) valves in 2008.
The Jordanian Company for Manufacturing and Filling of LPG registered as a
wholly-owned subsidiary of the Jordan Petroleum Refinery Company, with a capital of 4 million dinars paid (50%) on 28/5/2008, has not exercised its activities yet.
D. Filling of Asphalt Drums
The number of drums filled with asphalt in 2009 reached (1624) drums compared
with (2795) drums for 2008. Total sales of asphalt drums in 2009 were (1577)
drums.
3. SALES
A. Petroleum Products
Sales during 2009 reached (4421713) tons compared with (4352426) tons in 2008;
this shows an increase of (69287) tons representing a rate of (1.57%).
The following table and graph show the development of sales for the last four
years compared with the initial year of 1961 : -
Product
LPG
1961
2006
2007
2008
2009
Percent Change
2009/2008
673
313072
335137
321272
338553
5.37
39301
740595
839641
861177
1022515
18.73
-
299568
296747
297681
318437
6.97
Kerosene
50824
150073
130659
99633
110654
11.06
Diesel
98428 1774362
1746054
1508376
1613536
6.97
Fuel Oil
36179 1279228
1246820
1096251
823043
-24.93
Asphalt
11101
168329
154026
167395
193785
15.76
-
1337
1146
641
1190
85.64
Gasoline
Jet Fuel
White Spirit
Total
236506 4726564
4750230
4352426
4421713
1.57
Note: (257640) tons of fuel oil, fuel gas, and naphtha were used in the Refinery during 2009
for steam production and process operation shall be added to the above sales figures.
54th Annual Report
27
١٨٠٠
1800
LPG
١٦٠٠
1600
Gasoline
١٤٠٠
1400
Avtur
١٢٠٠
1200
Kerosene
Diesel
Fuel Oil
Asphalt
White Spirt
١٠٠٠
1000
٨٠٠
800
٦٠٠
600
٤٠٠
400
٢٠٠
200
0٠
1961
١٩٦١
2006
٢٠٠٦
2007
٢٠٠٧
2008
٢٠٠٨
2009
٢٠٠٩
B. Lubricating Oils (Jopetrol)
Sales during 2009 of various grades of lube oil under the trade mark of JOPETROL reached (17332) tons compared with (13974) tons for 2008 representing an
increase of (3358) tons or (24.03 %). This is due to the increase in quantities
exported to Iraq. Lube oils were sold in containers of capacities ranging between
(1/4) liter to (209) liters as well as in bulk to larger consumers.
The following table and graph show the development in lube-oil sales for the last
four years compared with the initial production year 1977.
Year
1977
2006
2007
2008
2009
Percent Change
2009/2008
Sales
535
14499
17665
13974
17332
24.03 %
28
Lub-Oil sales Ton.
١٨٠٠٠
18000
16000
١٦٠٠٠
14000
١٤٠٠٠
١٢٠٠٠
12000
١٠٠٠٠
10000
٨٠٠٠
8000
٦٠٠٠
6000
4000
٤٠٠٠
2000
٢٠٠٠
0٠
1977
١٩٧٧
2006
٢٠٠٦
2007
٢٠٠٧
2008
٢٠٠٨
C. LPG Cylinders
2009
٢٠٠٩
Sales of (12.5) kg LPG cylinders during 2009 reached (100997) compared with
(100089) for the 2008, showing an increase of (908) cylinders or (0.9 %). .Sales
of (50) kg LPG cylinders in 2009 reached (187) cylinders compared with (78) in
2008. The estimated number of (12.5) kg LPG cylinders in circulation in the Kingdom during 2009 is (4.5) million cylinders.
The number of imported LPG cylinders during 2009 reached (227898) compared
with (315000) in 2008 in order to meet the increase in demand and to replace the
scrapped ones.
54th Annual Report
29
4-Company,s Clients
A-Petroleum Products
The Company supplies all consumers, centers in the Kingdom with their needs of
fuels and lube oils. The Company keeps good relationships with its customers and
always works on meeting their expectations and considers them as partners in its
development. The clients are from various sectors of the society. They are government institutions, filling stations, LPG Distributors, air line companies headed by
the Royal Jordanian Airlines, The Central Electrical Generating Co, The Cement
Company, Arab Potash Co, and the Phosphate Mines Co.
B- Jopetrol Lube Oils
The largest customers of Jopetrol lube oils are the Armed forces, Royal Jordanian
Air Force, the Potash Co., the Phosphate Mining Co., Comedat Co. , the mining
company to develop mining, Royal Jordanian airlines, Jordan Steel Company, the
Directorate of Civil Defense, The Greater Amman Municipality, Aqaba Railway
Corporation, Water Authority, Ministry of Public Works, and the Ports Corporation. Some of its customers are the Royal Scientific Society, the Specifications and
Meteorology Corporation, and the Jordanian Universities.
The Company - lube oils Products
5. DISTRIBUTION OF PETROLEUM PRODUCTS
The Company supplies petroleum products daily to all service stations and directly
to some industries and other establishments.
30
A. Storage of Petroleum Products in the Kingdom
Storage capacity in the Kingdom amounted (1581725) tons distributed as follows:Location
Storage Capacity (ton)
Refinery tanks/site: Zarqa-Irbid-Amman
854000
Aqaba stores tanks/new project
Fuel distribution stations
154300
131927
Aqaba stores tanks/old project
28000
Large companies
Airports stations
Total
402350
11148
1581725
B. Service Stations
At the end of Year 2009, the number of service stations in the Kingdom reached
(433) stations, capable of storing (131927) tons of which (19) stations are for private use and have storage capacity of (1148) tons.
The number of new stations that entered service in different parts of the Kingdom
during 2009 was (14) stations. While the number of new stations expected to enter
service during 2010 based on the number awarded permissions given in 2009 and
previous years is (12) .
The number of LPG distribution centers in the Kingdom reached(899) in 2009.
The following table shows the number of stations and gas distribution centers in
each governorate of the Kingdom:
Governorate
Amman
Zarka
Balqa
Madaba
Irbid
Mafraq
Jerash
Ajloun
Karak
Ma’an
Tafeela
Aqaba
Total
No. of Gas
Stations 2009
No. of LPG distribution
centers 2009
33
53
172
46
225
86
12
63
40
212
10
18
12
10
37
69
19
17
26
13
91
42
18
433
54th Annual Report
8
899
31
C.LPG filling
The number of LPG cylinders of (12.5) Kg capacity filled in the Zarka, Irbid and
Amman stations in 2009 reached (25.2) millions compared with (23.7) millions
in 2008, showing an increase of (1.5) million cylinders or (6.32 %). Also (58764)
cylinders of (50) Kg capacity were filled in 2009 compared with (57958) during
2008, with an increase of (806) cylinders or (1.39%). The average daily filling rate
in the three LPG filling stations based on actual working hours during 2009 was
(68931) cylinders of (12.5) kg and (161) of (50) kg cylinders.
D. Airports Stations
The Company operates three refueling stations located in Queen Alia International
Airport, Amman Civil Airport, and King Hussein International Airport in Aqaba.
During 2009, the stations serviced (32026) flights and handled about (381304) million liters compared with (359718) million liters in 2008, an increase of (21586)
million liters. The Company also refueled (10798) flights of Avgas. The Company
imported quantities of avgas in 2009 which were supplied by Amman airport station to airplanes reaching (1621478) liters compared with (1454578 ) liters in year
2008, which is an increase of (166900) liters.
E. Aqaba Depots
First: Old Depot in the Port Area (Old Project).
This facility has storage capacity of (28000) tons. It received (28930) tons of fuels
and base oil during 2009 compared with (30727) tons in 2008 with a decrease of
32
(1797) tons or (5.84%) for 2008. Sales from this depot reached (32654) tons in
2009 compared with (26649) tons in 2008 or an increase (5708) tons or (21.2%)
compared with 2008
Second: New Depot in the Industrial Area (New Project)
This facility has storage capacity of (154300) tons, it received (3937403) tons during 2009 compared with (4229567) tons received in 2008, a decrease of (292164)
tons or (6.91%) compared with 2008. Total sales from this depot in 2009 was
(4045729) tons compared to (4269266) tons in 2008, a decrease of (223537) tons,
or (5.2%) compared with 2008.
6. TRANSPORT OF PETROLEUM PRODUCTS
The fuel transport fleet of the Company is consists of (47) tankers, (194) trailers
and (268) semi trailers which are used for hauling fuels and LPG. The fuel quantities transported in 2009 by the Company,s fleet amounted to (1356) million tons
compared with (1489) million tons in 2008.
The number of trips undertaken in 2009 was (65373) in which the total mileage
was (9.4) million kilometers compared with (72111) trips in 2008 of a total mileage of (9.4) million kilometers. In 2009, the Company boosted its transport capability by contracting local companies to transport (1.9) million tons of diesel, Jet
Fuel and LPG.
7. TENDERS AND SUPPLIES
The Company,s tenders and purchases are governed by “a supplies and works
code” that sets the mechanisms for preparing the specifications and issuing the
tenders and their evaluation. During 2009, the Company issued (163) tenders as
follows:
> (106) Tenders for supplying oil products, lubricant oils and spare parts..
> (28) Tenders for transporting petroleum products to the gas stations all over the
Kingdom.
> (17) Tenders of Construction works.
> (10) Tenders for selling obsolete cylinders, scrap metals and equipments.
> (2) Tenders for exporting fuel oil
> The number of purchase orders issued in 2009 was (1768) for both foreign and
local orders.
54th Annual Report
33
8. Major Suppliers
The Company through its Purchasing Department deals with large number of suppliers and Local agents representing more than (30) countries. The following table
shows the major suppliers:
Crude
Oil
Petroleum
Products
Vehicles
Spare Parts
Reactors and heat
exchangers
Nalco,UAE
Renault
France
KOCH,
Italy
Chevron,
France
UOP,UK
Diesel
Technique, UAE
UTON
Romania
Avtun
U.K
GE Betz,
Italy
United diesel,
UAE
BORSIG
Germany
Sabic,
Saudi Arabia
Chemic,
Italy
Bukke Have,
Denmark
Gulf
Interstate
Chematek,
Italy
Osaka, Japan
Sonatrach.
Algeria
AFTON
HTP, Germany
Base Oils
Additives
Lubrizol
(UAE)
Innospec, UK
Shell.UK
Solvochem,
Holland
Naftomar,
Greece
I.P.G, Kuwait
Aramco, Aramco,
Saudi Saudi Arabia
Arabia
Luberef
Aramco
Saudi Arabia
Somo
Iraq
Chemicals
Nissan
Japan
Trafigura, UAE
Skania. Swedish
Shell
U.K
ACERBI, Italy
ATB,
Italy
9. SHAREHOLDERS
The number of shareholders on 31/12/2009 was (32160).
The following table and graph show the distribution of shareholders according to
their nationalities:
Nationality
Number of Shareholders
Percentage of shareholders %
Jordanian
28302
88.00
26100233
81.56
1306
4.06
3459999
10.81
32160
100
32000000
100
Arab
Foreign
Total
2552
34
7.94
Number of Shares
2439768
Percentage of number of Shares %
7.63
,
Shareholders Nationalition
Arab
Foregin
Jordanian
The following table and graph show the distribution of the company,s shares according to the shareholders, categories
Category
Individuals
Number of
Shareholders
Number of
Shares
Percentage of number
of shares %
1
81
6547000
1347716
20.5
4.2
31986
Social Security Corporation
Service & Industrial Companies
Banks
19872420
6
2587355
Saving funds
24
Other Public entities
34
Insurance Companies
11
Jordan Investment Corporation
1
2009
‫ﺍﳌﺴﺎﻫﻤﲔ‬
‫ﻓﺌﺎﺕ‬
‫ﺣﺴﺐ‬
‫ﺍﻟﺸﺮﻛﺔ‬
‫ﺃﺳﻬﻢ‬
‫ﻳﻊ‬
Others
16
Total
32160
Other Public
1088751
196045
151623
86270
122820
32000000
Insurance
Companies
Saving Funds
62.1
-8.0
3.4
0.6
0.5
0.3
0.4
100
Jordan Investment
Coporation
Others
Bank
Service &
Industrial
Companies
Social Security
Individuals
54th Annual Report
35
Shareholders Holding more than (5%) of the Company,s Shares for Years 2008 and 2009
Name
Percentage Total
Shares %
Number of shares
2008
2009
2008
2009
Social Security Corporation
6553000
6547000
20.48
20.46
Islamic Development
Bank/ Jeddah
2000000
2000000
6.25
6.25
Total
8553000
8547000
26.73
26.71
Shares Activity in Amman Stock Exchange
The number of shares transacted during 2009 in the stock exchange amounted to
(46) million shares valued at JD (345) million JD executed through (80085) transfer contracts at an average share price of (7.479) JD.
The following table shows the activity movement of the Company,s shares in the
stock exchange from 2006 to 2009:
Particulars
2006
2007
2008
2009
Shares transacted
13267953
19332667
150746253
46124142
Volume in JD
70002930
124454499
2073544415
245000000
16679
27014
180656
80085
160000000
237120000
219520000
217600000
Closing price in JD
5.000
7.410
6.860
6.800
Average share price in JD
5.280
6.440
13.755
7.479
Circulation %
41.46
60.42
471.08
144.14
year
Number of transactions
Market value of shares JD
36
The following table shows the distribution of shareholdings ranges as on
31/12/2009:
Share Holding
Range
Shareholders
Shares
Number
Percentage %
1-100
14336
44.58
680109
2.1
101-500
12037
37.43
3228391
10.1
501-1000
2805
8.68
2220059
6.9
1001-5000
2398
7.46
5173042
16.2
5001-10000
322
1.00
2342024
7.4
10001-20000000
262
0.810
18356375
57.3
32160
100
32000000
100
Total
Number
Percentage %
The following table shows the dividends distributed during the last Five Years
(2005-2008) and those recomended for 2009 :
Year
2005
2006
2007
2008
Percentage %
16
12
12
20
25
160
120
120
200
250
Dividend of one share
(fills)
* Recommended for distribution for the year 2009.
54th Annual Report
37
2009*
The following table shows the net profits and shareholders Equity for the last five
Years (2005-2008) and those recommended for distribution in 2009.
Year
Net profits
Distributed profits (after
discount of distribution tax)
Shareholders equity
JD
JD
JD
2004
5660342
3840000
56864263
2005
7784111
5120000
63727560
2006
6210137
3840000
59521538
2007
5949863
3840000
62073576
2008
9973938
6400000
65373696
2009*
10854768
8000000
69514241
* Recommended for distribution for the year 2009.
38
54th Annual Report
39
1939
Name
Mr. Adel Ahmad Al-Kodah
chairman of the board Starting
from 30/04/2007
No.
1
1965
Mr. Wasef Yaqoub Azar
Mr. Omar Ashraf Al Kurdi
Representative of social security Corporation
3
4
1959
1956
Mr. Naser Sultan Shreideh
Representative of social security Corporation
Eng.Wael Akram Al Saqqa
Representative of the Engineering union of pension fund
5
6
7
1967
1936
Mr. Waleed Methcal Asfour
2
1932
Date of
Birth
30/04/2007
Former minister
Chairman & member of board of directors
1969 for several banks & public corporations and
companies.
Ex-Director General for Phosphate Mines Co.
MA in development administration & Economics
A.U.B, Lebanon
Former Head of Engineering union
1980 Member of several Public Shareholders Companies.
Member of Parliament
1983 Former
Member of a number of board of directors.
B.Sc in Civil Engineering
Frenzo University USA
B.Sc in Architectural
engineering
Jordan University
of Petra Commission
1995 President
Ex. Secretary General Ministry of planning
MA in Economics
Yarmouk university
30/04/2007
30/04/2007
1/10/2007
01/10/2007
30/04/2007
Former minister
1958 Chairman & member of board of directors for
several banks & companies
MA in political science &
economics.
Tenese university USA
M.Sc in Electrical Engineerminister
ing from Georgia University/ 1987 Former
Member
of board of directors
USA
Finance and catering former minister
President of Audit Bureau.
1978 President of the Executive Commission for Priva- 10/11/2004
tization, some higher administrative positions
and the membership at boards of directors
Brief Practical Experience
-
15700
N/A
-
600
1150
500
-
-
-
-
-
-
500
-
-
-
-
-
-
-
3333 **
3333
5000 *
5000 *
3333
3333
3333
Contracts, Projects
Number
of
and Contracting RemuneraDate of
Number Shares Held by held
com- tion during
Joining the of Shares relatives panybywiththeChairBoard
Held
man and Members year 2008
of Board
MA in General Administration- University of Southern
California
Academic Degree
Graduation Year
A- The Chairman and Members of the Board of Directors:
12000
12000
-
-
12000
12000
12000
Transportation Allowance for the
year 2009
10. THE CURRICULUM VITAE OF THE CHAIRMAN, MEMBERS OF THE BOARD OF DIRECTORS AND
THE EXECUTIVE MANAGEMENT OF THE COMPANY AND THEIR REMUNERATION DURING 2009
40
*
Remuneration is paid to the Social Security Corporation.
** Remuneration is paid to the Engineering union pension fund.
*** Remuneration is paid to the Islamic Development Bank-Jeddah.
1979
- Chairman and General Manager of several
companies.
1/4/2009
128038
of Industrial Engi1953 Bachelor
neering United States U.S.
1/4/2009
Eng. Suleiman Abdel Razzaq
AlDaoud
13
1960
600
1935 BA in Law, Cairo University,
BA in Mechanical Engineer1944 ing, University of Lawrence
United States U.S.
-
Eng. Naser Falah M adadhah
12
01/06/2007
100
-Former Chairman of the Board of Directors of
the phosphate mines
-Former adviser of the Prime Minister of the
projects and tenders
-Former Chairman of the Central Tenders Committee
- Ex-Secretary General Ministry of Planning
- An advisor of the Islamic Development,
Bank-Jeddah
30/04/2007
500
Dr. Nabeeh Ahmad Salameh
11
1979
Asst. General director of
Jordan Islamic Bank
Brief Practical Experience
-Chairman of the Board of Directors of the Arab
Potash
-Former General Manager of Jordan Investment 1/4/2009
Corporation
Mohammad Eid Bundokji
10
in Economics
1947 PhD
University of Kiel U.K
1986
Graduation Year
in economics from
1946 Ph.D.
Cairo
Dr. Jamal Mohammed Salah
Starting from 1/6/2007
9
in Business Administra1953 B.A
tion, Arab University/ Beirut
Academic Degree
2500
Mr. Mohammed Majid Allan
Representative of Al-Samaha
Real Eastate Co.
8
Date of
Birth
-law professor
-Former head of the Jordanian Arbitration before, 1/4/2009
and board member of several companies and
institutions
Name
No.
10000
Daughter
-
-
-
-
-
-
-
-
-
-
-
12000
-
-
-
-
9000
9000
9000
5000 *** 12000 ***
3333
Contracts, Projects
Number
of
and Contracting
TransportaDate of
Number
Held by held by the com- Remuneration AllowJoining the of Shares Shares
tion
during
relatives pany with Chairance for the
Board
Held
man and Members year 2008 year 2009
of Board
54th Annual Report
41
Mr. Ramzi Al Masri
Eng. Zaid Al Kayyed
3
4
1952
1957
Bachelor of Mechanical
Engineering-Egypt
Master of Engineering
refining and Petrokimoi- Romania
Current Position
Executive Director of
Transportation
Executive Director of
distribution
Chief Financial Officer
Secretary of the Board
of Directors
Refinery Executive
Director
Chief Executive Officer
** Eng. Abdel Karim Alawin has been appointed as a Chief Executive Officer from 7/3/2010
1979
1981
1990
1987
1982
1978
BS in Chemical
Engineering/I.I.T University/India
BA Accounting / University of Jordan
CPA from Colorado,
USA
Jordanian auditing CPA
(JCPA)
1992
Graduation Year
PhD in Economics/University of Illinois/USA
Academic Degree
,
* Dr. Ahmad Al-Refai s Contract Ended on 31/12/2009
Eng. Abdulla Khader
Eng. Abdel Kareem
Alaween **
2
6
1955
Dr. Ahmad Hussein AlRefai*
1
1959
1966
Name
No.
Date of
Birth
1979
1981
14/4/2005
28/10/1978
1/1/2004
Date of
Appointment
B. The curriculum vitae for the Executive Chairman and Executive Directors of the Company
N/A
N/A
N/A
3000
N/A
Shares
Held
N/A
N/A
N/A
N/A
N/A
Shares Held
by Relatives
The following table shows the number of shares owned by Members of the Board
as of 31/12/2009
Number of shares
owned
personally
No. of shares owned
by the organization he
represents
Chairman of the Board
Mr. Adel Al-Kodah
500
-
Vice Chairman of the Board/
Mr. Waleed Methcal Asfour
1150
-
15700
-
600
-
Representative of the Islamic Development
Bank-Jeddah.
Dr. Jamal Mohammad Salah
-
2000000
Representative of the Engineering Union of
Pension Fund
Eng. Wael Akram Al Saqa
-
196810
Representative of Al Samaha Real Estate Co.
Mr. Mohammed Majed Allan
100
2000
-
6547000
Mr.Mohammad Eid Bundokji
2500
-
Dr.Nabeeh Ahmad Salameh
500
-
Eng.Naser Falah Madadhah
600
-
128038
-
Name
Mr. Wasef Yaqoub Azar
General Social Security Corporation
Mr. Omar Ashraf Kurdi
Mr. Naser Sultan Shreideh
Eng. Suleiman Abdel Razzaq AlDaoud
42
11. Administrative Affairs
In support of the Company’s policy of providing a decent living environment for
its employees and their families; which motivate them to contribute their best
efforts and energies in work therefore the company administration had decided
during 2009 the following:-
> The distribution of half-month salary bonus for all employees in the company
> Introduction of university scholarships for the children of workers at the com>
pany rate of 5 grants a year.
Modifying the scheme of death and disability and compensation by increase
every segment of the compensation a 100 dinars.
A. Training & Development
The Company continued developing the technical & management skills of its employees (177) training programs in 2009 benefiting (1809) participants administered by the Training Department, were held either in-house at Abdul Majeed
Shoman Training Center, or inside Jordan & abroad as shown briefly below:-
> Implementation (77) training activities in technical administrative and financial
advantage of them in Jordan (133) employees.
> (67) Employees attended (42) training courses& conferences abroad. Training
(10) delegates from the housing and working ministry, engineering union, and
the company training program for fresh graduates engineers and some business
and finance graduates.
> Continued cooperation with universities and colleges
for training students to
complete their undergraduate program requirements. (86) students had been
trained during 2009 .
> Held (22) different training program in the areas of maintenance and operations
and the establishment of occupational safety and awareness in quality management within the Center for Abdul Majeed Shoman Training Center of the
company benefited from (1104) employees.
B. Manpower
1- The total number of employees on 31/12/2009 was (3501) distributed as shown
below:Particulars
Numbers
%
Permanent Employees
2367
67.6
Annual Contracts
798
22.8
Semi-Annual Contracts (3-6) months
308
8.8
Total
3501
100
Daily Workers
28
54th Annual Report
0.8
43
2- The Following Table shows the development in the number of permanent & annual
contract employees from 2005-2009.
Year
Number
2005
2006
Permanent Employees
3202
2998
Annual Contracts
229
Total
3431
2007
2008
2009
2702
2521
2367
260
474
675
798
3258
3176
3196
3165
3- Distribution of Permanent & Annual Contract Employees by Rank as at 31/12/2009
Rank group
Permanent
Employees
Annual
Contracts
Total
Percentage of Permanent
& contract employees to grand total
Special
27
7
34
1.1
First
246
2
248
7.8
Second
1820
380
2200
69.5
Third
274
409
683
21.6
Total
2367
798
3165
100
‫ﺗﻮﺯﻳﻊ ﺍﳌﻮﻇﻔﲔ ﺍﳌﺼﻨﻔﲔ ﻭﺍﻟﻌﻘﻮﺩ‬
Special
Third
First
Second
44
4- The following table & graph show the distribution of Permanent Employees & Annual Contracts by Educational Qualifications as at 31/12/2009.
Permanent
Employees
Annual
Contracts
Total
Percentage of Permanent
& contract employees to
grand total %
Engineering graduates
125
61
186
5.9
University graduates
163
45
208
6.6
Intermediate diploma
307
93
400
12.6
General Secondary Certificate
395
128
533
16.9
Apprentice
275
85
360
11.3
Vocational Centers
92
6
98
3.1
Educational Qualifications
Below general Secondary Certificate
1010
370
1380
‫ﻭﺯﻳﻊ ﺍﳌﻮﻇﻔﲔ ﺍﳌﺼﻨﻔﲔ ﺣﺴﺐ ﻣﺆﻫﻼﺗﻬﻢ ﺍﻟﻌﻠﻤﻴﺔ‬
Total
2367
798
3165
Engineering Graduates
43.6
100
University Graduates
Beiow General
Secondary Certificate
Intemediate
Diploma
Vocational Centers
Apprentice
54th Annual Report
General Secondary
Certificate
45
12. Safety and Environment
Since its inception the company has been careful for the safety of its staff , facilities and the environment from the basis of that logo (safety first), and the company aims to consolidate the concept of “safety culture” among its employees by
ensuring that safety is everyone›s responsibility from the top management level
and ending with the lowest level, and through the involvement of supervisors in
decision-making and to establish procedures for ensuring the safe operation of
equipment and through the provision of personal protective equipment for their
employees as required by the safety regulations in the company.
Department,s achievements during the year 2009:
The company is working to provide safe working conditions for staff of the refinery by following proper operating procedures which has been adopted in the
petrochemical industries in the world
In spite of the company,s conviction that personal protective equipment is a last
resort to ensure the protection of workers, the company gave personal protective
equipment to employees free of charge at the value of 133,232 Jordanian dinars
in 2009.
Special attention to the safety of equipment and facilities in the refinery, brought
considerable attention as a specialized global authorities such as TUV, RPI, UOP,
and the Royal Scientific Society to carry out the periodic assessment on refinery,s
equipment especially the LPG spheres.
The company realizes the importance of the scientific and training aspects and
continued sending a large number of staff and engineers to the scientific sessions
,and specialized training in some local and foreign countries, and also holding
training courses for staff working in the refinery with regard to safety issues to
improve their technical and scientific level and to raise the safety level in the company.
Refinery participates in many government commissions and committees on specifications of petroleum derivatives and provides technical advice on matters relating to gas and gas distribution and storage.
As the Department of Safety and risk analysis contributed in the following activities during 2009:
< Follow-up to the issuance of various work permits in the refinery / location,
and set the conditions for implementing the actions required in the permits
and ensure compliance to ensure the safety of work and workers.
< Study and review the system of work permits in the refinery in accordance
with international standards and codes and commensurate with the systems
used in refineries and oil facilities in coordination and participation of all
constituencies, and the study was submitted to the Department for approval.
< Holding orientation sessions to introduce new employees and trainees on the
most important items of safety rules and regulations in force in the company
through lectures and road shows in various locations in the refinery, in addition to distributing copies of the safety manuals to the new engineers in the
company.
46
< Making daily rounds by supervisors to check safety in the refinery units
and facilities and direct notices to prevent accidents that could affect the
facility›s safety, staff or conduct of the production process which were produced (101) notice to prevent accidents during the year 2009 has been directed to the relevant departments to correct the irregularities which they
were received.
< Monitoring of the activities related to the safety of equipment and staff,
and that during periods of restoring regular and emergency units and ensure
compliance of all workers with the systems and safety instructions.
< Follow-up
procedures and safety measures adopted in the establishment
of new LPG storage tanks at the location through safety supervisor who
is available for the duration of work and through the commission on the
follow-up project.
13. LOCAL COMMUNITY SERVICE
The Company continued providing services to the local community by providing financial support for educational and religious institutions, charities, and local
municipalities in the kingdom through donation to support them in achieving their
mission. In 2009, the Company donated JD (251499) of which JD (245700) were
in cash for (57) institutions, the recurring constant donations including those approved by the board of directors were JD (10000) for every governmental university. In addition to the most important cash money donations to the following: - Jordanian Dinars (JD)
Jordanian Hashemite Charity Organization55000
Jordanian Hashemite Fund for Development15000
Union workers in the Jordan Petroleum Refinery Company 9000
Hashemiya Municipality33000
King Hussein Cancer Center15000
While the value of contributions in kind provided by the company during the 2009
amount (5799) dinars have been distributed to (7) different directions.
14- PROJECTS
Completed Projects and Projects under Construction:
First :Completed Projects
1. Works Related to the Refinery Units:
>
Purchase of prosthetic devices for hydrogen cracking unit at a total cost (7,145)
million dinars, and as follows:
< Purchasing two exchange Hydro cracker reactors unit at a total cost (4.6)
million dinars.
54th Annual Report
47
<
>
>
>
>
>
>
>
>
>
>
>
>
>
>
>
>
The purchase of three heat exchangers replacement tool with a network of
steel pipes Stanlis for the Hydro cracker unit at a total cost (2.2) million
dinars.
< Purchase of four air coolers cells No. 308-E14A / / D with a new design
packages instead of the current pipelines total cost of (0,345) million dinars.
Purchase and installation of diesel generator capacity (2.4) MW power at a
total cost (1.8) million dinars.
Purchase and install a removal of salts from the crude oil at atmospheric distillation unit number (3) total cost (1.3) million dinars.
Purchase a backup equipment for the various refinery units: air coolers, air cells
at a total cost (660,000) dinars.
Purchase two firefighting car multi-purpose (foam / powder) at an estimated
cost (600,000) dinars.
Buy (48) a radar device to measure temperature level and installed on the tanks
Purchase and installation of two major fire-fighting pumps running on diesel
engines at a total cost (280,000) dinars.
Purchase five pressure vessels replacement tool for various units in the refinery
Buy Blowers soot for the two boilers steam No. 7001 and No. 7002 at a total
Add crude oil reservoir to the crude oil receipt station using the current reservoir number (15) at a total cost (180,000) dinars.
Installation and operation the control systems for steam boiler No. 7004 at a
total cost (100,000) dinars.
Buy two diving pumps for groundwater wells at a total cost (75,000) dinars.
The purchase of three vessels, rubber lined replacement tool at a total cost
(70,000) dinars Service Unit No. (2).
Transfer tank number (35) for storing MTBE and unleaded gasoline at a total
Extend the pipeline network of oil and fuel to supply the units of third expansion project at a total cost (50,000) dinars.
Purchase and installation a new trays for removal tower number (2) in the
contaminated water treatment unit to improve its performance at a total cost
(50,000) dinars.
Purchase and installation a pump and Building a pond, industrial rainwater at
an estimated cost (50,000) dinars.
2. Construction Works:
> Paving and re-paving streets and squares of different stale and replace parties
and pathways in the refinery at a total cost (744.000) JD.
48
> Civil works for Modernization of cathodic protection systems in the refinery at
a total cost (346,000) dinars.
> Buildings facilities for the refinery›s guards (using the new cafeteria) at a total
> Raise the station capacity of receiving crude oil in Al-Zarqa, add (6) lanes for
unloading crude oil tanks and the installation of supporting steel foam fire extinguishing system at a total cost (166,000) dinars.
> Sporadic actions include the establishment of cars hole Preview in the refinery
and installation of a plastic line (20) inches for sewage refinery›s water and replacement of damaged floor tiles with asphalt concrete tiles. Maintenance and
paving the roads inside the refinery and the establishment of two rooms observe
the door and the representative of the Ministry of Public Works on the exit
of loading facilities and office operations maintenance and establishment of a
trench of concrete to electricity cables in the first distillation unit (1), and other
works at a total cost (155,000) dinars.
> Maintenance of apartments for the Aqaba,s staff at a total cost (148,000) dinars.
> Establishment of infrastructure to modernize the computer network project in
the refinery at a total cost (140,000) dinars.
> Establishment of infrastructure for the radar installation on the refinery storage
tanks project at a total cost (134,000) dinars.
> Establishment of the foundations and independent steel structures for the cooling water tanks of liquefied gas spherical (S 302, S 303 S 301,) at the location
of the refinery at a total cost (98.300) dinars.
> Building new offices outside the major reservoirs hangars in the refinery at a
total cost (97,000) dinars.
> Build a fence and gates for the company,s farm at a total cost (84.900) dinars.
> Replacement the furniture and cabinets of three rooms in the main laboratories
of the refinery at a total cost (80,000) dinars.
> Connecting the offices
of loading and unloading sewerage at the refinery and
sewerage Marka,s fuel station with main network of public sewerage at a total
> Resurfacing, paving the streets around the, fill gas canisters station No. (2) in the
AL-Zarqa at a total cost (78,000) dinars.
> Sporadic: Update the telephones network in the residential area in the refinery
and re-paving asphalt playgrounds at a gas station in Amman and the establishment of the fountains in the south of Aqaba, ... Etc., at an estimated cost
(54,000) dinar.
> Civil works for the installation of additional crude oil storage tank in the receiving station of crude oil at a total cost (53.800) dinars.
> Creating a square for the storage of cylinders in Amman›s gas station at a total
> Processing and maintenance of the buildings at the residential area at an estimated cost (50,000) dinars.
54th Annual Report
49
Second :Projects under Progress
1. Works Related to the Refinery Units:
> Construction of (4) LPG spherical tanks, of 8000 tons total capacity, at a
total cost of JD (27) million. The project has been awarded to a Consortium of Lotte Engineering and Construction Co., and Hantech Co.
>
>
>
>
>
>
Upgrading the capacity of Asphalt Unit from (800) tons per day to (1,100)
tons per day, at a total cost of JD (650,000)
Purchasing a reactor for Naphtha Hydro treating Unit, at a total cost of JD
(375,000).
Modified the fire fighting systems on the tanks at an estimated cost (180,000)
dinar. The fire
The use of a specialized body system, FERM-Fire and Explosion Management in order to build a system to prevent and fight against fires and explosions at an estimated cost (156,000) dinars.
Buy cyclones backup for a FCC Unit under the new designs at an estimated
Purchase and installation pipes for the naphtha,s oven unit to raise its efficiency at an estimated cost (60,000) dinars.
2. Works Related to LPG Filling Stations, Factories, Airport Service Stations and Aqaba Depots:
> Construction of two gasoline storage tanks at South Aqaba Depot and two
jet fuel storage tanks at Queen Alia International Airport JPRC Station
Project, at a total cost of JD (10.4) million.
> Purchase and installation a detection systems , fire alarm and fire water
pump driven by diesel engine and pump to save water network firefighting pressure at the storage in the main port, at an estimated cost (250,000)
dinars.
> Expand the pallet in the warehouse of the south of Aqaba at a total cost
(125,000) dinars.
> Rehabilitation receipt and unloading station of crude oil from the tanks at
the refinery at a total cost (342,000) dinars.
> Protection the control rooms in the refinery from the risk of explosion at an
estimated cost (150,000) dinars.
> Isolated acts: building a concrete wall for the fire fighting water tank in
the refinery and a separation fence between the residential area and the
refinery and raising the efficiency of separation in the drying ponds at the
refinery and modernization in the applications fuel offices in Amman,
Irbid and Zarqa, ... Etc., at an estimated cost (140,000) dinars.
> Create a hanger for the chemicals storage in the major reservoirs in the
refinery at a cost of (74,500) dinars.
50
Third: Projects that shall be executed during 2010
1. Works Related to Refinery Units:> Sulfur Recovery Unit Project, at an estimated cost of JD (12) million.
> Purchasing heat exchangers and spare tube bundles for Refinery units, at
an estimated cost of JD (1/060)million.
> Buy two gas pressure to replace the old one in Unit FCC Assistant at an
estimated cost (1) million dinars.
> Periodically intensive scan to rehabilitate spherical gas tanks at an estimated cost (700,000) dinars.
> Installation the saving electricity panels and improve the power factor on
the electrical transformers at an estimated cost (70,000) Dinars
> Update circuit breakers in the main electricity transformer stations 3Kv in
the refinery at an estimated cost (600,000) dinars.
> Installation a SCADA system for the control and protection of modern
protection (Siemens Relays) at an estimated cost (500,000) dinars.
> The purchase and installation of (62) radar device to measure temperature
level and installed on the tanks at an estimated cost (500,000) dinars.
> Purchase the equipment needed to fight a fire of the entire surface of the
tank as recommended by Wiliams Fire Company at an estimated cost
(500,000) dinars.
> To modify one part of a fire-fighting system of an estimated cost (450,000)
dinars.
> Buy (3) tanks, mobile storage for foam material capacity (18000) liters
each at an estimated cost (400,000) dinars.
> Purchase and installation a generator and two superheated steam for new
asphalt unit at an estimated cost (400,000) dinars.
> Television control system for the refinery and south of Aqaba locations at
> Buy a rescue and rapid intervention car Hazmat at an estimated cost
(400,000) dinars.
> Supply paint of gas cylinders line 12,5 cylinder capacity of 150 kg / hour
at an estimated cost (400,000) dinars.
> Installation and operation the control systems for two boiling steam No.
7001 and No. 7002 at an estimated cost (400,000) dinars.
> Connect to the water line of fire-fighting with the main water department
at an estimated cost (370,000) dinars.
> Supply filtering system in a manner reverse automatic cleaning at naphtha
unit at an estimated cost (300,000) dinars.
> Check crude oil storage tanks, floor at the location at an estimated cost
(250,000) dinars.
54th Annual Report
51
>
>
>
>
>
>
>
>
>
>
>
>
>
>
>
>
>
>
>
>
>
Buy tubes for the two boiling steam No. A / B at an estimated cost (250,000)
dinars.
Supply and installation equipment to protect the power grid at an estimated
Modify the heating system of all facilities at the refinery east of the rail using
hot water instead the steam at an estimated cost (200,000) dinars.
The use of specialize body in Operational safety systems to work on a system similar to what is happening in the international refineries and provide
a mechanical equipment safety system in the areas of maintenance, inspection and operations, at an estimated cost (200,000) Dinars
Purchasing of two air pressure for unit Merox 2 No. 306-MC-1A & B at an
estimated cost (170,000) dinars.
Drilling new water wells or rehabilitate well No. (6) Estimated cost (150,000)
dinars.
Periodic intensive examination of a fire control network at an estimated cost
(150,000) dinars.
Purchase and installation of new power transformer instead of the old transformers at an estimated cost (150,000) dinars.
Introduction of a specialized body to study the modernization load derivatives system in the refinery, at an estimated cost (150,000) dinars.
Buy (3) packs pipe heat exchangers 301-E1 A, B, C & D in the atmospheric
distillation unit number (3) Estimated cost (140,000) dinars.
Replacement recycling compressors of the hydrogen Unit No. C4-A & B
new compressors estimated cost (125,000) dinars.
Amendments the fillings of water cooling towers at an estimated cost
(120,000) dinars.
Purchasing replacement pumps for the refinery untis and for the oil separator
unit at an estimated cost (115,000) dinars
Replace pumps the lower part number (301 P108 A & B) of the atmospheric
distillation unit number (3) Estimated cost (110,000) dinars.
Purchase and installation a new compressor for the purpose of using the
storage capacity of vessels hydrogen storage (H2 Bullets) at an estimated
Purchase equipment of testing and measuring to detect the leakage of toxic
and harmful gases, at an estimated cost (100,000) dinars.
Update vibration Systems of steam turbines for electric generators (G3 &
G4) in the refinery at an estimated cost (100,000) dinars.
Consultancy services for the power grid at an estimated cost (96,000) dinars.
Purchase and installation a backup feed pump to Naphtha Hydro treating
Unit capacity (100 m 3) at an estimated cost (65,000) dinars.
The installation of the pressure system and central air-conditioning and ventilation of the control room and the first units FCC, Topp.1, Vac.1 at an estimated cost (60,000) dinars.
Buying pressure receptacle No. 304-V7X for naphtha unit at an estimated
52
>
Purchase and installation valves for remote operation on high heat pumps at
> Design and supply laboratory with fire control system at an estimated cost
(50,000) dinars.
2. Works Related to LPG Filling Stations, Factories, Airport Service Stations
and Aqaba Depots:> Periodic intensive inspection for the rehabilitation of gas tank in gas station
at Amman at an estimated cost (250,000) dinars.
> Purchasing and installing a water spray cooling system for LPG piping located outside LPG pumps area , at Amman LPG Filling Station , at an estimated cost of JD (50000).
>
Maintenance of the concrete pavements at the Refinery process units, at an
estimated cost of JD (650000).
> Expanding store hangar at Aqaba South Depots, at an estimated cost of JD
(250000).
> Maintenance of laboratories , replacement of the furniture and supply of
new industrial lab cupboards for the remaining halls of laboratories at the
Refinery, at an estimated cost of JD (200000).
> The work of fire protection for the mineral-bearing facilities the carrier of refrigeration (Air cooled condensers) units within the refinery at an estimated
> Maintenance of scattered roads and squares and open roads in the bush for
the purpose of fire fighting at an estimated cost (100,000) dinars.
> Improve the entrance to the refinery at an estimated cost (100,000) dinars.
> Maintenance of public buildings at an estimated cost (75,000) dinars.
> Connecting the sewage systems of lube oil factory buildings with the main
public sewage system, at an estimated cost of JD (65000).
> Construction of water evaporation pit at Aqaba South Depots, to meet environmental requirements , at an estimated cost of JD (60000).
> Construction of parking area for Transportation Department employees, cars
at Zarqa site, at an estimated cost of JD (60000).
> Construction of structural steel shelter, and various steel and concrete structures at LPG Filling Stations, at an estimated cost of JD (60000).
> Installation of an emergency external steel escape stair and installation of
fire resistance door for isolating the maintenance rooms, in the Head Offices
building, at an estimated cost of JD (50000) .
> Construction of rest house for laborers of Zarka LPG Filling Stations, at an
estimated cost of JD (50000) .
> Demolition and removal of the ancient Romans stores at an estimated cost
(50,000) dinars.
54th Annual Report
53
Al-Mafraq Tafelah Kerak
Aqaba
Irbid
Zarqa
Amman
Location
Geographical distribution locations for the Company’s activities, investment cost and
number of employees as of 31/12/2009
Value of Fixed
assets (JD)
Description
General Administration Departments
Petroleum Products Marketing Dept./Offices
Musdar Station
Um Al-Heeran Station
Marka Station
Ameriah Station
Khan Alzabeeb Station
Distribution/Maintenance
Queen Alia International Airport Station
Amman Civil Airport Station
LPG activities/Amman LPG Filling Station
Total
Refinery’s Site
Transportation
Loding
Cylinders Factory
LPG activities/Zarka LPG Filling Station
Petroleum Products Marketing Dept./Zarka Office
Petroleum Products Marketing /Site’s Station
Lube Oils Manufacturing and Marketing
Petroleum Products Marketing / AlRemal Station
Total
Distribution and Marketing / LPG activities
Distribution and Marketing/Irbid Office & Maintenance Center
Financial /Accounting
Medical Services
Total
Distribution and Marketing / Aqaba warehouses
Distribution and Marketing / King Hussein International Airport
Gas Station
Residential area
Information Technology Department
Total
Distribution and Marketing / Kerak Station
Total
Distribution and Marketing / Lands
Total
Distribution and Marketing / Buildings and Lands/
Mfraq Station
Total
Ma’an Land
Total
Number of employees
Contracted
Contracted
Workers
daily workers
3 – 6 Months
1
1
2
5
2
6
9
98
12
123
13
87
3
1
-
Permanent
Contract
5508224
78033
218117
264104
96498
1115100
391090
13992747
2643303
1053164
15082855
40443235
158961214
21627483
1666150
1848152
7589972
905
115804
7048383
732749
199582812
11284206
4690
22721
11311617
23895772
231319
40266
683654
24851011
84710
84710
8328
8328
188
34
7
11
5
4
61
27
11
105
453
1053
492
44
5
2
4
2
2
1
10
16
2
54
142
349
35
22
40
4
6
69
1686
91
6
3
1
101
117
6
123
4
4
-
49
2
19
1
455
32
2
2
36
158
1
159
5
5
-
21
12
8
121
26
26
24
24
1
1
-
1
4
9
6
5
5
-
923133
-
1
5
-
923133
-
1
5
-
2367
798
308
28
103860
103860
Azraq Land
75268
Total
75268
Grand Total
54
277391974
Information
Systems CIO
Executive Director
Marketing
& Distribution
Executive Director
Transport
Process Planning &
Quality Control Group
Inspection,
E& HS Group
Environment
Inspection
Safety & Risk Analysis
Fire Fighting
Crude & Products Supply & Trading
Purchasing
Workshop Dep.
Movement Dep.
Lube Oil Business
Logistics & Storage ( Aqaba Depots)
LPG Business
Airport Serv. Business
Petroleum Products Business
Stations Maintenance
Financial Planning Budget & Control
General Accounting Cash Mang.
Payroll. Personnel & Admin. Services
Training Org. & Systems
Medical Services
Executive Director
Supply & Trading
Plan Sched. & Valorization
Process Development
Laboratory &QC
Maintenance
Group
Executive Director
Refinery
Electric
Chief Financial
Officer
Instrumentation
Executive Director
Human Resources
Planification Methods
Strategic
Strategic Planning
Planning &
&
Research
Research Dep.
Dep.
General Turnaround
Legal
Legal &
& Risk
Risk Mang.
Mang. Dep.
Dep.
Maintenance By Area
Internal
Internal Audit
Audit &
& Control
Control Dep.
Dep.
Engineering
Group
Training
Training Center
Center
Administrative
Administrative Services
Services
Stores
Chief
ChiefExecutive
ExecutiveOfficer
Officer
Civil Engineering
Secretary
Secretary of
of The
The Board
Board
Refinery Projects & Eng.
Chairman
Chairmanof
ofThe
TheBoard
Board
Operation ٣
Board
BoardOf
OfDirectors
Directors
Operations
Group
Operation ٢
Jordan Petroleum Refinery Co. Ltd.
Organization Chart
Operation١
54th Annual Report
55
Movements & Loading
Workshop & Factory Maintenance
Other Explanatory Notes
> The total capital investment for Company’s activities in 2009 was JD (35105107).
> The Company owns as of 31/12/2009 the following subsidiary companies:
- The Jordanian company for the Manufacturing and Filling of LPG with a total capital of JD
4 Million 50% paid.
- The Jordanian company for the Manufacturing of Lube oils with a total capital of JD 3 Million 50% paid.
> Fees for the financial auditors Deloitte & Touch Company were
JD (48000).
,
> There were no unusual activities outside the main Company s activities in 2009, except for the
profit settlement expenses for 2008 with the government .
>
>
Declaration of the Board of Directors
The Board of Directors of Jordan Petroleum Refinery Co declares that there were no substantial
matters that would affect the sustainability of the Company for the upcoming financial years
that were not disclosed.
Members of the board of directors mentioned below declare their full responsibility for the
accuracy and complete information and accounts in the report.
Name
Deputy chairman
Member
Adel Al Kodah
Waleed Asfour
Wasef Azar
Member
Member
Member
Jamal Salah
Omer Al Kurdi
Naser Shreideh
Member
Member
Member
Eng. Wael Al Saqqa
Mohammed Allan
Chairman of the Board
Signature
Name
Signature
Name
Signature
Name
Member
Member
Mohammad Eid Bundokji Nabeeh Ahmad Salameh
Member
Member
Naser Falah Madadhah
Suleiman Abdel Razzaq Aldaoud
Signature
3- The mentioned below declare that they take the full responsibility for the accuracy and complete information and accounts in the report.
Deputy Chairman
Name
Waleed Asfour
Chief Executive Officer.
Chief Financial Officer
Abdel karim Alawin
Ramzi Al- Masri
Signature
56
The Recommendations of the Board of Director
1- To adopt the Company’s financial statements for the year ended on 31/12/2009 and the Board
of Directors report, future plans and to exonerate the members of the Board of Directors.
2- To approve the allocation of (1363250) JD to statuary reserves.
3- To declare (25%) dividend (250) fills per share payable to shareholders registered in Company’s register on the date of convening of the general meeting in which this resolution is
adopted.
4- To select the Company’s auditors for the fiscal year 2010.
5- To consider any other issues proposed by the General Assembly and falls within the scope of
the General Meeting.
54th Annual Report
57
58
JORDAN PETROLEUM REFINERY COMPANY
(A PUBLIC SHAREHOLDING LIMITED COMPANY)
AMMAN - JORDAN
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR
ENDED DECEMBER 31, 2009
TOGETHER WITH INDEPENDENT
AUDITOR’S REPORT
TABLE OF CONTENTS
Page
Independent Auditor’s Report
61
Consolidated Statements of Comprehensive Income
67
Consolidated Statements of Financial Position
Consolidated Statements of Income
65
66
Consolidated Statements of Changes in Shareholders’ Equity
Consolidated Statements of Cash Flows
68
69
Notes to Consolidated Financial Statements
54th Annual Report
72
59
60
Independent Auditor’s Report
AM / 7609
To the Shareholders of
Amman - Jordan
We have audited the accompanying consolidated financial statements of Jordan Petroleum Refinery Company (a Public Shareholding Limited Company), which comprise of
the consolidated statement of financial position as of December 31, 2009, and the consolidated statement of income, consolidated statement of comprehensive income, consolidated statement of changes in shareholders› equity, and consolidated statement of cash flows
for the year then ended, and a summary of significant accounting policies and other explanatory notes. We have previously audited the consolidated financial statements of the
Company for the year 2008, and issued our qualified report thereon dated June 8, 2009.
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards.
This responsibility includes designing, implementing and maintaining internal control
relevant to the preparation and fair presentation of consolidated financial statements that
are free from material misstatement, whether due to fraud or error; selecting and applying
appropriate accounting policies; and making accounting estimates that are reasonable in
the circumstances.
Auditor’s Responsibility
Our responsibility is toa express an opinion on these consolidated financial statements
based on our audit. Except for what is stated in paragraph (a) below, we conducted our
audit in accordance with International Standards on Auditing. Those standards require
that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the consolidated financial statements are free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the consolidated financial statements. The procedures selected depend on
the auditor’s judgment, including the assessment of the risks of material misstatement of
the consolidated financial statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant to the Company,s preparation
and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the Company›s internal control. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of ac-
54th Annual Report
61
counting estimates made by management, as well as evaluating the overall presentation
of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Basis of Qualified Opinion
As stated in Notes (2 and 30) to the consolidated financial statements, the Company’s
concession period ended on March 2, 2008. Accordingly, the Company signed a settlement agreement with the Jordanian Government on February 25, 2008, concerning the expiry of the concession, which was approved by its General Assembly in its extraordinary
meeting dated March 22, 2008. Moreover, no final settlement has been reached regarding
the provision for doubtful debts and provision for slow-moving and spoiled inventory,
whereby recoveries from these two provisions balances outstanding as of the concession expiry date should be credited to the Government, in addition to the Government›s
requirement that any new or additional provisions should be agreed on with the Government according to the Ministry of Finance letter dated November 15, 2009 concerning
the settlement of pending financial issues between the Government and the Company
provided that these provisions are to be reviewed quarterly. Furthermore, the Ministry of
Finance has been informed of the outstanding provisions amounts and balances with the
Government as of December 31, 2009 per the Company,s letter No. 2/25/7/2953 dated
March 18, 2010. The Minsitry of Finance approval of these balances and provisions as of
December 31, 2009 has been received per the Ministry of Finance letter No. 18/4/8801
dated March 30, 2010.
Qualified Opinion
In our opinion, except for the effect of any adjustments that might have been determined
to be necessary had we been able to verify the financial impact of the settlement agreement with the Government mentioned in paragraph (a) above, the consolidated financial
statements present fairly, in all material respects, the consolidated financial position of
Jordan Petroleum Refinery Company as of December 31, 2009, its consolidated financial
performance, and its consolidated cash flows for the year then ended in accordance with
International Financial Reporting Standards.
Emphasis of Matter Paragraphs
Without further qualifying our opinion, we draw attention to the following:
1. As stated in Notes (2 and 20) to the consolidated financial statements, the Ministry
of Finance, per its letter No. 18/4/9952 dated April 29, 2009, required the Company
to record the surplus in the targeted profit in excess of JD 7.5 million annually to the
Government,s account. Moreover, the Company,s Board of Directors rejected, in its
resolution No. 75/2009 dated May 14, 2009, to impose a profit ceiling for the Company. The Board of Directors reiterated this rejection in its resolution No. 127/2009 dat-
62
ed November 3, 2009. According to the Board of Directors, resolution No. 132/2009
dated November 15, 2009 and the Council of Ministers approval in its meeting dated
November 24, 2009, the relationship between the Government and the Company for
the year 2009 has been settled through the recognition of an annual profit of JD 7.5
million after tax excluding the profits from the Lube Oil Factory and the surplus realized from refining Iraqi crude oil provided that any new provisions or increase in the
outstanding provisions are agreed on with the Government. Consequently, the Company has prepared the consolidated financial statements for the year ended December
31, 2009 on the basis of the targeted net profit of JD 7.5 million excluding the income
from the Lube Oil Factory and the Company,s share from the surplus realized from
refining Iraqi crude oil. This resulted in claiming JD 3,666,853 from the Government
according to this settlement.
2. As stated in Notes (2 and 10) to the consolidated financial statements, the Ministry
of Energy and Mineral Resources and the Ministry of Finance, through the Pricing Committee,s resolutions, adjusted the prices of some petroleum products. This
resulted in a reduction in the Company,s share of revenue according to IPP prices
compared to what the Company should have received according to the previously
approved arrangements over seven months period starting June 2009, and the surplus
is considered to be payable to the Ministry of Finance. However, the Company,s
management considers this procedure contradicting to the service agreement signed
between the Company and the Government which states that approval be granted to
the Company to carryout its activities on a commercial basis. This treatment resulted
in reduction of the Company,s realized profits of approximately JD 23.6 million for
the period from June 2009 to December 31, 2009, as reported by management.
Report on Legal Requirements
The Company maintains proper accounting records, and the accompanying consolidated financial statements are in agreement therewith and with the financial statements presented in the Board of Directors, report, and we recommend that the General Assembly
of Shareholders take into consideration the effect of what is mentioned in paragraph (a)
and paragrahs (1 and 2) above when approving these consolidated financial statements.
The accompanying consolidated financial statements are a translation of the original
consolidated financial statements in the Arabic language to which reference should be
made.
Amman - Jordan
March 30, 2010
Deloitte & Touche (M.E.) - Jordan
54th Annual Report
63
AMMAN
CONSOLIDATED
ASSETS
Note
Current Assets:
Cash and bank balances
Accounts receivable and other debit balances
Crude oil, finished oil products and supplies
Total Current Assets
4
5
December 31,
2009
JD
10,711,632
2008
JD
6,827,058
170,351,268
244,539,271
464,404,012
497,066,258
283,341,112
245,699,929
Deferred tax assets
6
6,206,955
6,318,273
Available-for-sale investments
7
4,969,520
4,102,893
Fixed Assets:
8
3,827,801
1,209,808
Lands
Fixed assets
Less: Accumulated depreciation
273,564,172
265,974,036
31,000,675
30,852,123
242,563,497
Net Book Value of Fixed Assets
Projects under construction
24,164,770
Total Fixed Assets
TOTAL ASSETS
235,121,913
2,538,831
58,993,246
34,600,762
534,573,733
542,088,186
156,787,303
156,787,303
Contra Accounts
Crude oil & strategic inventory derivatives
Death, disability, and indemnity fund
13
28
25,983,164
20,777,970
Board of Directors Chairman
THE ACCOMPANYING NOTES CONSTITUTE AN INTEGRAL PART OF THESE
CONSOLIDATED FINANCIAL STATEMENTS AND SHOULD BE READ WITH THEM.
64
JORDAN
BALANCE SHEETS
Note
LIABILITIES
Current Liabilities:
Due to banks
Accounts payable and other credit balances
Provision for income tax
Total Current Liabilities
Long - Term Liabilities:
December 31,
2009
2008
JD
JD
9
185,682,246
233,444,122
11
3,904,317
5,386,655
10
251,506,955
219,208,329
441,093,518
458,039,106
Due to death, disability, and indemnity fund
28
23,099,530
17,822,000
Provision for staff end-of-service indemnity
12
704,342
712,202
Deferred tax liabilities
6
Total Long-Term Liabilities
162,102
141,182
23,965,974
18,675,384
32,000,000
32,000,000
104,816
104,816
,
SHAREHOLDERS EQUITY
Authorized, subscribed and paid-up capital (32,000,000
shares at JD one per share)
Statutory reserve
14
Cumulative change in fair value - net
15
Voluntary reserve
Retained earnings
,
Total Shareholders Equity
،
TOTAL LIABILITIES AND SHAREHOLDERS EQUITY
Contra Accounts
Ministry of Finance-funding of strategic inventory
Provision for death, disability, and indemnity fund
13
28
18,013,537
4,469,371
14,926,517
3,623,661
11,834,999
69,514,241
65,373,696
534,573,733
542,088,186
156,787,303
156,787,303
25,983,164
54th Annual Report
17,810,220
65
20,777,970
AMMAN - JORDAN
CONSOLIDATED STATEMENTS OF INCOME
Note
For the Year Ended
December 31,
2009
2008
JD
JD
Sales
16
1,818,083,819
2,402,736,934
Cost of sales
17
(1,763,233,865)
(2,333,638,258)
54,849,954
69,098,676
18
4,202,226
4,157,772
Provisions no longer needed
19
4,777,488
-
Settlement of the year 2009 income
20
3,666,853
-
67,496,521
73,256,448
21
(23,736,149)
(20,315,482)
22
(9,392,179)
(7,761,275)
(12,735,696)
(23,425,353)
27 C
(5,000,000)
-
the government
23
(3,000,000)
-
Other expenses - net
24
(428,524)
(12,094,127)
13,203,973
9,660,211
(2,349,205)
(1,935,894)
10,854,768
7,724,317
Gross Income from Sales
Add: Operating income and other income
Gross Income
Less: Selling and distribution expenses
General and administrative expenses
Bank interest and commissions
Provision for lawsuits
Settlement expenses for the year 2008 with
Income before Tax
Income tax expense
11
Income for the Year
Weighted Average Number of Shares
25
32,000,000
32,000,000
Earnings per share
25
0.339
0.241
THE ACCOMPANYING NOTES CONSTITUTE AN INTEGRAL PART OF THESE
CONSOLIDATED FINANCIAL STATEMENTS AND SHOULD BE READ WITH THEM.
66
AMMAN - JORDAN
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the Year Ended
December 31,
Income for the year
2009
2008
JD
JD
10,854,768
7,724,317
845,710
(726,902)
11,700,478
6,997,415
Comprehensive income:
Change in fair value of available-for-sale investments
Comprehensive income for the Year
54th Annual Report
67
68
0
0
997,393
32,000,000 17,810,220
0
Appropriation to statutory reserve
Dividends paid to shareholders
Balance - End of the Year
0
104,816
0
104,816
-
104,816
-
-
104,816
JD
Voluntary
Reserve
3,623,661
(726,902)
4,350,563
( 726,902)
4,469,371
-
-
845,710
845,710
3,623,661
JD
JD
0
10,854,768
845,710
11,700,478
65,373,696
JD
Total
6,997,415
62,216,281
7,724,317
(726,902)
69,514,241
( 997,393)
( 3,840,000) ( 3,840,000)
11,834,999 65,373,696
7,724,317
8,948,075
7,724,317
-
14,926,517
- (1,159,933)
(6,400,000) (6,400,000)
(1,363,250)
10,854,768
10,854,768
11,834,999
Retained
Earnings *
* The retained earnings balance includes an amount of JD 6,206,955 as of December 31, 2009 resulting from deferred tax assets (JD 6,318,273 as of
December 31, 2008)
,
** The Company s General Assembly decided in its ordinary meeting held on July 12, 2009, to distribute dividends at 20% of the nominal value of the
share, equivalent to JD 0.200 per share for a total amount of JD 6,400,000 as income for shareholders for the year 2008.
Comprehensive Income for the Year
32,000,000 16,812,827
-
Year 2008
32,000,000 18,013,537
Balance - beginning of the year
Income for the year
Change in fair value of available - for - sale investments
1,363,250
- (1,159,933)
-
-
Appropriation to the Ministry of Finance - settlement of excess earnings
Dividends paid to shareholders **
Appropriation to statutory reserve
0
14
JD
32,000,000 17,810,220
JD
Statutory
Reserve
Income for the year
Change in fair value of available - for - sale investments
Comprehensive Income for the Year
Year 2009
Note
Paid-up
Capital
Cumulative
Change in Fair
Value - Net
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS› EQUITY
JORDAN PETROLEUM REFINERY COMPANY (A PUBLIC SHAREHOLDING LIMITED COMPANY)
AMMAN - JORDAN
AMMAN - JORDAN
CONSOLIDATED STATEMENTS OF CASH FLOWS
CASH FLOWS FROM OPERATING ACTIVITIES:
Income before tax
Adjustments for:
Lawsuits provision
Depreciation of fixed assets
For the Year Ended
December 31,
2009
2008
JD
JD
13,203,973
9,660,211
5,000,000
-
7,907,726
8,674,886
(4,777,488)
130,843
77,101
Settlement of the year 2009 income
(3,666,853)
Gas cylinders replacement provision
76,896
Provisions no longer needed
End-of-service indemnity
Settlement expenses of the expiry of the concession with the Government
Net Cash Flows from Operations before Changes in Working Capital
Decrease (increase) in accounts receivable and other debit balances
(Increase) in crude oil, finished oil products and supplies
Increase in due to death, disability and indemnity fund
Increase in accounts payable and other credit balances
Net Cash Flows from (used in) Operating Activities before Income
Tax and Paid Provisions
Income tax paid
17,875,097
-
6,418,300
7,580,373
32,410,871
73,028,070
(49,623,639)
34,628,780
53,327,322
(37,641,183)
5,277,530
(63,717,670)
3,217,783
93,168,294
(24,385,333)
(3,720,225)
(1,006,012)
89,309,366
(25,586,440)
Fixed assets - net
Net Cash Flows (used in) Investing Activities
(32,300,210)
(32,300,210)
(10,209,718)
(10,209,718)
(Decrease) increase in due to banks
Dividends paid to shareholders
Net Cash Flows (used in) from Financing Activities
(47,761,876)
(5,362,706)
(53,124,582)
13,897,731
(3,364,589)
10,533,142
Staff indemnity paid
Net Cash Flows from (used in) Operating Activities
CASH FLOWS FROM INVESTING ACTIVITIES:
CASH FLOWS FROM FINANCING ACTIVITIES:
Net Increase (decrease) in Cash
Cash and bank balances - beginning of the year
Cash and bank balances - End of the Year
54th Annual Report
(138,703)
3,884,574
6,827,058
10,711,632
69
(195,095)
(25,263,016)
32,090,074
6,827,058
70
AMMAN - JORDAN
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
54th Annual Report
71
AMMAN - JORDAN
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. General
The Company was established on July 8, 1956 with a capital of JD 4 million. In 1968,
the Company doubled its capital to JD 8 million, and in 1976 the capital was increased
to JD 32 million.
In addition to the main units of refining and producing hydrocarbon products, the Company owns four factories for the production of lube-oils, LPG cylinders, containers, and
asphalt drums. The accompanying consolidated financial statements include the operations of the main refining units and those of the subsidiary factories.
In addition to the refining and production of hydrocarbon products, the Company transports and distributes the products to distribution stations all over the Kingdom. It is
also responsible for the maintenance of these stations and the marketing of lube-oils.
According to the settlement agreement with the Jordanian government, dated February
25, 2008 concerning the termination of the concession, the Company should segregate some of the Company›s activities through establishing new companies wholly or
partially owned by Jordan Petroleum Refinery Company after the expiry of the concession agreement on March 2, 2008. During the year ended December 31, 2008, the
Company established two subsidiary companies wholly owned by Jordan Petroleum
Refinery Company, namely: Jordan Liquid Gas Manufacturing and Packing Company
and Jordan Lube-oil Manufacturing Company. These companies have been founded in
preparation of the segregation of the activities of gas packing and lube-oil manufacturing. Moreover, none of these companies has conducted any commercial activities yet.
Additionally, Jordan Petroleum Refinery Company is still in the process of segregating
the Company›s other activities.
The Board of Directors approved the accompanying consolidated financial statements
in its decision No. (65/2010) in its meeting held on March 17, 2010; and they are subject to the approval of the General Assembly of Shareholders.
2. The Concession Agreement
On February 10, 1958, Law No. (19) of the Year 1958 was issued to ratify the concession agreement signed between the Government and the Company on November 16,
1957. According to this agreement, the Government granted the Company a concession for fifty years, giving it the exclusive right to establish and invest in facilities for
the refining and processing of petroleum and hydrocarbon products and derivatives
thereof; to engage in the storage, distribution and selling of these products; to own and
lease lands; and other rights. Furthermore, the Company is exempted from all fees and
customs duties that would otherwise be charged on goods and materials imported for
the Company›s operations.
In accordance with the concession agreement, the Government has the right to determine and monitor the prices of oil, crude oil and products supplied for local consump-
72
tion. Furthermore, the Company shall submit to the Government a detailed statement
of production costs. In consultation with the Company, the Government shall specify
sales prices, and make every now and then amendments thereto as necessary. However, profit including income tax shall neither exceed 16% nor be lower than 7.5% of
the nominal value of the Company,s shares (taken on the basis of accounting periods of
five years each). The last period started in the year 2006 and ended on March 2, 2008,
the date on which the concession agreement expired.
The Company together with the Ministry of Finance settled the excess earnings for
the period ending in the year 2005 according to the concession agreement. The differences of JD 3.6 million have been settled from the statutory reserve in accordance with
the Ministry of Finance Letter No. 18/4/10494 dated October 31, 2006. Moreover, the
concession agreement expired on March 2, 2008. Accordingly, the Company signed a
settlement agreement with the Government dated February 25, 2008, concerning the
expiry of the concession agreement, which was approved by the Company,s General
Assembly in its extraordinary meeting dated March 22, 2008. Moreover, the financial
effect of some items in this agreement has not been determined nor reflected in the accompanying consolidated financial statements as stated in (Note 30). Additionally, no
final settlement has been reached regarding the provision for doubtful debts and provision for slow-moving and spoiled inventory, and excess earnings for the period from
the beginning of the year 2006 up to the end of the concession period on March 2, 2008.
Moreover, during the year 2009 the Company transferred an amount of JD 1,159,933
from the statutory reserve to the account of the Ministry of Finance to settle the excess
earnings for the period from the beginning of the year 2006 to the expiry of the concession dated March 2, 2008.
The Ministry of Energy and Mineral Resources and Ministry of Finance, through the
Pricing Committee,s resolutions, adjusted the prices of some petroleum products. This
resulted in a reduction in the Company,s share of revenue according to IPP prices
compared to what the Company should have received according to the previously approved arrangements over seven months period starting June 2009, and the surplus is
considered to be payable to the Ministry of Finance, contrary to what it is stated in item
4-2 of the service agreement signed between the Company and Government, which
states that approval be granted to the Company to carryout its activities on a commercial basis so that the local market petroleum derivatives prices are made according to
the pricing mechanisms approved by the Governmental Petroleum Derivatives Pricing
Committee based on international prices (IPP).This treatment resulted in reduction of
the Company,s realized profits of approximately JD 23.6 million for the period from
June 2009 to December 31, 2009.
According to Jordan Petroleum Refinery Company,s Board of Directors, resolution
No. 132/2009 dated November 15, 2009, the subject matter of His Excellency the Minister of Finance,s letter No. (18/4/25741) dated November 15, 2009, was approved to
settle the outstanding financial issues between the Company and both the Ministry of
Finance and Ministry of Energy and Mineral Resources on the following basis:
1. Through the petroleum derivatives pricing mechanisms, annual profit of JD 7.5 million after tax will be achieved related to the refining and distribution activities taking
into consideration that the change in the Company,s expenses is within the normal
ratios.
54th Annual Report
73
2. The Lube - Oil Factory,s income referred to item (1) above shall be excluded provided that it is subject to income tax.
3. The Company shall be granted an amount of 10 cents / barrel from the surplus realized for the Government as additional income from refining the Iraqi crude oil.
This consideration is calculated based on the quantity of the barrels received by the
Company provided that this income shall be subjected to tax.
4. Agreement shall be made between the Government’s representatives and Director
of the Audit Committee arising from the Company,s Board of Directors concerning
any new provisions or increasing the outstanding provisions. These provisions shall
be reviewed quarterly.
According to the Prime Ministry,s resolution in its meeting held on November 24,
2009, the above items have been approved to settle the financial relationship between
the Government and Jordan Petroleum Refinery Company for the year 2009.
Consequently, the Company has prepared the consolidated financial statements for the
year ended December 31, 2009 on the basis of the targeted income of JD 7.5 million.
This resulted in a claim by the Company of JD 3,666,853 from the Government according to this settlement.
3. Significant Accounting Policies
Basis of preparation of the consolidated financial statements
- The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) and related interpretations.
- The consolidated financial statements are stated in Jordanian Dinar.
The accounting policies adopted in this year are consistent with those applied in the
year ended December 31, 2008 except for the following:
- IFRS 7 ‘Financial Instruments: Disclosures’
The IASB published amendments to IFRS 7 in March 2009, which became effective
in 2009. The amendment requires enhanced disclosures about fair value measurements and liquidity risk. In particular, the amendment requires disclosure of fair
value measurements by level of a fair value measurement hierarchy. The adoption of
the amendment results in additional disclosures but does not have an impact on the
financial position or the comprehensive income of the Company and subsidiaries.
- IFRS 8 – Operating Segments. This standard, which replaced International Accounting Standard No. 14 «segment reporting», requires the adoption of the «management style in the presentation of internal reports» in the presentation of operating segments. This resulted in the presentation of additional operating segments.
Moreover, these operating segments will be presented in a manner consistent with
the internal reports presented to decision makers.
The adoption of this standard has had no impact on the financial position or the comprehensive income of the Company and subsidiaries
- IAS 1 (2007) Presentation of Financial Statements (effective for annual peri-
74
ods on or after January 1, 2009). The amendment to IAS 1 has led to some changes
including amended titles for the financial statements in addition to some changes in
their presentation and disclosure. However, this standard has had no effect on the
results of operations and financial position of the Company and its subsidiaries. This
standard requires that all changes in non – equity holders’ accounts within shareholders’ equity (i.e. comprehensive income) be presented separately in the statement
of comprehensive income.
The details of significant accounting policies are as follows:
a. Basis of Consolidation of the Financial Statements
The consolidated financial statements include the financial statements of the Company, its subsidiaries, and entities under its control, control is achieved when the
Company has the ability to control the financial and operating policies of the subsidiary company to obtain benefits from its activities. Transactions, balances, revenues,
and expenses between the Company and its subsidiaries are eliminated.
- The financial statements of the subsidiary companies are prepared for the same fiscal
year of the Company through adopting the same accounting policies of the Company. If the accounting policies adopted by the subsidiary differ from those adopted
by the Company, the necessary adjustments to the subsidiary company,s financial
statements are made so that its accounting policies match those of the Company.
As of December 31, 2009, the Company owns the following subsidiaries:
Company,s Name
Investment Balance
as of December
Location
31, 2009
Establishment
Date
Capital
Ownership
JD
%
JD
Jordan Liquid Gas
Manufacturing and Packing
Company (paid 50%)
4,000,000
100
2,000,000
Amman
May 28, 2008
Jordan Lube-oil Manufacturing
Company (paid 50%)
3,000,000
100
1,500,000
Amman
May 28, 2008
b. The crude oil and finished products price is determined according to the lower of
cost or net realizable value. Cost is determined according to the weighted average
method.
Finished and under process products at the subsidiaries, lube-oil and cylinders factories are stated at the lower of cost, following the weighted average method, or net
realizable value.
Raw materials, spare parts and supplies are stated at the lower of cost, following
the weighted average method, or net realizable value. A provision is taken for slow
moving-inventory items.
54th Annual Report
75
c.Available-for-Sale Investments
These represent financial assets that the Company does not intend to classify as trading financial assets or held to maturity.
Available-for-sale investments are stated at cost, plus acquisition expenses when
acquired, and are revalued at fair value subsequently. Changes in the fair value of investments are recorded in a separate account within the statement of comprehensive
income and shareholders’ equity. In case any of these investments is sold wholly or
partially, or impaired, then the recorded gain or loss therefrom is transferred from
shareholders’ equity to the consolidated statement of income.
The impairment loss previously recorded in the consolidated statement of income
can be recovered if it becomes objectively evident that the increase in fair value
occurred in a period subsequent to the recording of the impairment loss. Moreover,
the impairment loss of debt instruments can be recovered through the consolidated
statement of income, while the impairment loss in companies shares can be recovered through the cumulative change in fair value.
d. Fair Value
Fair value represents the closing market price of financial assets and derivatives on
the date of the consolidated financial statements. In case declared market prices do
not exist, active trading of some financial assets and derivatives is not available, or
the market is inactive, fair value is estimated by one of several methods including
the following:
- Comparison with the present market value of a very similar financial instrument.
- Analysis of future cash flows and discounting expected cash flows at a rate used
for a similar financial instrument.
- Adoption of options pricing models.
The evaluation methods aim at obtaining a fair value that reflects market expectations and considers market factors and any expected risks or benefits upon valuing
financial instruments. Furthermore, financial instruments the fair value of which
cannot be reliably measured are stated at cost net of any impairment in their value.
e. Accounts receivable are stated at net realizable value. Moreover, a provision for
doubtful debts is computed according to management’s estimates, and the recoverable amounts.
f. Fixed assets
Fixed assets are stated at cost net of accumulated depreciation and impairment
(if any), and depreciated (except for land), when ready for use, according to the
straight-line method over their expected operating lives at annual rates as follows:
76
%
Buildings
2–4
Machinery and production equipment
9 – 11
Machinery and support services equipment
5 – 15
Tanks and pipes
5 – 15
Machinery, electric equipment, and machines
10 – 15
Products haulage units
10 – 11
Vehicles
15
Furniture and office equipment
10 – 15
Library and training equipment
10
Distribution stations assets
10 – 15
Other fixed assets
7 – 11
Computer hardware
40
- When the recoverable amount of any fixed asset becomes less than its net book
value, its value is reduced to the recoverable amount and the impairment loss is
charged to the consolidated statement of income.
- The productive lives of fixed assets are revalued at the end of every year. If revaluation differs from previous estimates, the change is recorded in subsequent years,
being a change in estimate.
- Fixed assets are eliminated when disposed of or when no future benefits are expected from their use or disposal.
g. A provision for income tax is taken through estimating the expected tax liabilities.
The realized differences in estimated income tax are recorded in the consolidated
statement of income when paid upon reaching a final settlement with the Income
and Sales Tax Department.
h. Deferred taxes are taxes expected to be paid or recovered due to temporary
timing differences between the value of the assets or liabilities in the consolidated
financial statements and the value on the basis of which tax is calculated. Furthermore, deferred taxes are calculated using the liability method in the consolidated
financial statements according to the tax rates expected to be applied at the time of
settlement of the income tax liability or the recognition of the deferred tax assets.
- On the consolidated financial statements date, the balance of deferred tax assets
and liabilities are reviewed and reduced in case it is expected that the Company
would not benefit in whole or in part from the deferred tax assets, or the tax liability is settled or no longer needed.
54th Annual Report
77
i. Provisions are recognized when the Company has liabilities at the date of the consolidated statement of financial position arising from previous events, settlement of
these liabilities is probable, and their value can be reliably measured.
j. Revenue from fuel sales is recognized upon delivery of fuel to the customer and
issuance of the invoice.
k. Interest is charged to the consolidated statement of income on the accrual basis.
l. Transactions in foreign currencies are recorded in Jordanian Dinars at the exchange
rates prevailing at the dates of the transactions. Assets and liabilities denominated in
foreign currencies are translated to Jordanian Dinars at the average exchange rates
published by the Central Bank of Jordan at year-end. The resulting exchange gains
or losses are taken to the consolidated statement of income.
m. A provision for the replacement of damaged gas cylinders is taken based on technical studies that estimate the number of cylinders intended to be destroyed every
year.
n.The Company adopts the self-insurance policy for vehicles. A provision is taken
against vehicles accidents equivalent to the value of the comprehensive insurance
premiums of the vehicles and their cargo.
o.A provision for slow-moving, idle, and spoiled goods is taken based on technical
studies performed by the Company,s specialized committees.
p.A Provision for end-of-service indemnity is booked for any legal or contractual
obligations related to end-of-service indemnity, death and disability at the end of the
employees, services according to the accumulated service terms at the date of the
consolidated statement of financial position and the Company,s internal regulations.
q.Accounting Estimates
Preparation of the accompanying consolidated financial statements and the application of accounting polices require the Company,s management to estimate and
assess some items affecting financial assets and liabilities and to disclose contingent liabilities. These estimates and assumptions also affect revenues, expenses,
provisions, and changes in the fair value within shareholders› equity and require the
Company,s management to estimate and assess the amounts and timing of future
cash flows. The aforementioned estimates and assumptions are based on multiple
factors with varying degrees of assessment and uncertainty. Moreover, the actual results may differ from the estimates due to the changes resulting from the conditions
and circumstances of those estimates in the future.
The Company,s management believes that the estimates in the consolidated finan-
78
cial statements are reasonable. The details are as follows:
- A provision for doubtful debts, and slow-moving and spoiled inventory items is
taken on the basis and estimates approved by management in conformity with
International Financial Reporting Standards (IFRSs).
- Income tax expense for the year is accounted for in accordance with the prevailing
laws, regulations, and International Financial Reporting Standards.
- Management periodically reassesses the economic useful lives of tangible assets
for the purpose of calculating annual depreciation based on the general condition of these assets and the assessment of their expected useful economic lives in
the future. Impairment loss (if any) is charged to the consolidated statement of
income.
- A provision for cylinders expected to be scrapped and replaced in the future is
taken on the basis and assumptions approved by the Company,s management according to International Financial Reporting Standards.
- A provision is booked for any legal or contractual obligations related to end-ofservice indemnity and death and disability according to the Company,s internal
regulations.
- Management frequently reviews financial assets stated at cost to estimate any
decline in their value. Impairment loss (if any) is charged to the consolidated
statement of income.
- A provision for lawsuits raised against the Company is taken based on an approved
legal study prepared by the Company’s legal consultants. According to the study,
probable future risks are identified. This study is reviewed periodically.
- Fair value hierarchy:
The Company is required to determine and disclose the level in the fair value hierarchy into which the fair value measurements are categorised in their entirety,
segregating fair value measurements in accordance with the levels defined in
IFRS. Differentiating between Level 2 and Level 3 fair value measurements, i.e.,
assessing whether inputs are observable and whether the unobservable inputs
are significant, may require judgement and a careful analysis of the inputs used
to measure fair value, including consideration of factors specific to the asset or
liability.
r. Adoption of New and Revised International Financial Reporting Standards (IFRSs)
r.a Standards affecting presentation and disclosure
The following new and revised standards have been adopted in these consolidated
financial statements for the current period. The details of other Standards and Inter-
54th Annual Report
79
pretations that have been adopted but that have had no effect on the consolidated
financial statements are set out in section r.b.
IAS 1 (as revised in 2007) Presentation of Financial
Statements
IAS 1 (2007) has introduced terminology changes
(including revised titles for the financial statements)
and changes in the format and content of the financial statements.
Improving Disclosures about Financial Instruments
(Amendments to IFRS 7 Financial Instruments:
Disclosures)
The amendments to IFRS 7 expand the disclosures
required in respect of fair value measurements
and liquidity risk. The Company has elected not to
provide comparative information for these expanded
disclosures in the current year in accordance with the
transitional reliefs offered in these amendments.
IFRS 8 Operating Segments
IFRS 8 is a disclosure standard that has resulted in
re-designation of the Company,s reportable segments.
r.b Standards and Interpretations adopted with no effect on the financial statements
The following new and revised Standards and Interpretations have also been adopted in these consolidated financial statements of the Company. Their adoption
has not had any significant impact on the amounts or disclosure reported in these
consolidated financial statements but may affect the accounting for future transactions or arrangements.
Improving Disclosures about Financial Instruments
(Amendments to IFRS 7 Financial Instruments: Disclosures)
The amendments to IFRS 7 expand the disclosures required in respect of fair value measurements and liquidity
risk.
IFRS 8 Operating Segments
IFRS 8 is a disclosure Standard that requires re-designation of the Company,s reportable segments based on the
segments used by the Chief Operating Decision Maker to
allocate resources and assess performance. [There was no
material impact of this Standard on the previous disclosures and reported results or the financial position of the
Company since the business segments reported earlier as
per the requirements of IAS 14 Segment Reporting are
also used by the General Manager to allocate resources to
the segments and to assess their performance.
IFRS for SMEs Small and Medium-sized Entities
80
This Standard is available immediately but the adoption
has to be decided by the jurisdiction of implementation
Amendments to IFRS 2 Share-based Payment - Vesting Conditions and Cancellations
IAS 23 (as revised in 2007) Borrowing Costs
Amendments to IAS 32 Financial Instruments: Presentation and IAS 1 Presentation of Financial Statements
– Puttable Financial Instruments and Obligations
Arising on Liquidation
IFRIC 13 Customer Loyalty Programmes
IFRIC 15 Agreements for the Construction of Real
Estate
IFRIC 16 Hedges of a Net Investment in a Foreign
Operation
The amendments clarify the definition of vesting conditions for the purposes of IFRS 2, introduce the concept
of ‘non-vesting’ conditions, and clarify the accounting
treatment for cancellations.
The principal change to the Standard was to eliminate the
option to expense all borrowing costs when incurred. This
change has had no impact on these financial statements
because it has always been the Company›s accounting
policy to capitalise borrowing costs incurred on qualifying assets.
The revisions to IAS 32 amend the criteria for debt/equity classification by permitting certain puttable financial
instruments and instruments (or components of instruments) that impose on an entity an obligation to deliver
to another party a pro-rata share of the net assets of the
entity only on liquidation, to be classified as equity, subject to specified criteria being met.
The Interpretation provides guidance on how entities
should account for customer loyalty programmes by allocating revenue on sale to possible future award attached
to the sale.
The Interpretation addresses how entities should determine whether an agreement for the construction of
real estate is within the scope of IAS 11 Construction
Contracts or IAS 18 Revenue and when revenue from the
construction of real estate should be recognized.
The Interpretation provides guidance on the detailed
requirements for net investment hedging for certain hedge
accounting designations.
The Interpretation addresses the accounting by recipients for transfers of property, plant and equipment from
‘customers’ and concludes that when the item of property,
IFRIC 18 Transfers of Assets from Customers (adplant and equipment transferred meets the definition of an
opted in advance of effective date of transfers of assets asset from the perspective of the recipient, the recipient
from customers received on or after 1 July 2009)
should recognise the asset at its fair value on the date of
the transfer, with the credit recognised as revenue in accordance with IAS 18 Revenue.
Improvements to IFRSs (2008)
Amendments to IFRS 3, 5, IAS 1, IAS 16, IAS 19, IAS
20, IAS 27, IAS 28, IAS 29, IAS 31, IAS 36, IAS 38,
IAS 39, IAS 40 and IAS 41 resulting from May and October 2008 Annual Improvements to IFRSs the majority
of which is effective for annual periods beginning on or
after January 1, 2009.
54th Annual Report
81
r.c Standards and Interpretations in issue not yet effective
At the date of authorization of these consolidated financial statements, the following
new and revised Standards and Interpretations were in issue but not yet effective:
New Standards and amendments to Standards:
Effective for
annual periods
beginning on or after
IFRS 1 (revised) First time Adoption of IFRS and IAS 27 (revised)
Consolidated and Separate Financial Statements – Amendment relating
to Cost of an Investment in a Subsidiary, Jointly Controlled Entity or
Associate
1 July 2009
IFRS 3 (revised) Business Combinations – Comprehensive revision on
applying the acquisition method and consequential amendments to IAS
27 (revised) Consolidated and Separate Financial Statements, IAS 28
(revised) Investments in Associates and IAS 31 (revised) Interests in
Joint Ventures
1 July 2009
IAS 39 (revised) Financial Instruments: Recognition and Measurement –
Amendments relating to Eligible Hedged Items(such as hedging inflation
risk and hedging with options)
1 July 2009
IFRS 1 (revised) First time Adoption of IFRS – Amendment on additional exemptions for First-time Adopters
1 January 2010
IFRS 2 (revised) Share-based Payment – Amendment relating to the
Company cash-settled share-based payments
1 January 2010
IAS 32 (revised) Financial Instruments: Presentation – Amendments
relating to classification of Rights Issue
1 February 2010
IAS 24 Related Party Disclosures – Amendment on disclosure requirements for entities that are controlled, jointly controlled or significantly
influenced by a Government
1 January 2011
IFRS 9 Financial Instruments: Classification and Measurement
(intended as complete replacement for IAS 39 and IFRS 7)
1 January 2013
Amendments to IFRS 2, IFRS 5, IFRS 8, IAS 1, IAS 7, IAS 17,
IAS 18, IAS 28, IAS 36, IAS 38 and IAS 39 resulting from April
2009 Annual Improvements to IFRSs.
82
Majority effective for annual
periods beginning on or after 1
January 2010
New Interpretations and amendments to Interpretations:
Effective for
annual periods
beginning on or after
IFRS 17: Distributions of Non-cash Assets to Owners
1 July 2009
IFRIC 19: Extinguishing Financial Liabilities with Equity Instruments
1 July 2010
Amendment to IFRIC 14: IAS 19: The Limit on a Defined Benefit
Asset, Minimum Funding Requirements and their interaction
1 January 2011
Amendment to IFRIC 16: Hedges of a Net Investment in a Foreign
Operation
1 July 2009
Amendment to IFRIC 9 (revised): Reassessment of Embedded Derivatives relating to assessment of embedded derivatives in case of
reclassification of a financial asset out of the ‘FVTPL’ category
1 January 2013
The Company,s management anticipates that the adoption of these Standards and Interpretations in future periods will have no material impact on the consolidated financial
statements of the Company in the period of initial application except for the following:
IFRS 9
The application of the current version of IFRS 9 would mainly result in applying different classification and measurement criteria for financial assets. The requirements
of IFRS 9 apply a consistent approach to classifying financial assets and replace the
numerous categories of financial assets in IAS 39, each of which has its own classification criteria. They also result in one impairment method, replacing the numerous
impairment methods in IAS 39 that arise from the different classification categories.
IFRS (3), IAS (27), (28), and (31) - Revised:
The application of these revised standards leads to the adoption of new policies relating to the Company,s acquisition of new shares in associate and subsidiary Companies,
partial disposal of the Company,s shares in subsidiary and associate companies and an
increase in the investment in subsidiary and associate companies.
54th Annual Report
83
4. Accounts Receivable and Other Debit Balances
This item consists of the following:
2009
December 31,
2008
JD
JD
Governmental institutions and departments – fuel *
74,780,821
99,375,475
Fuel customers
17,106,995
17,365,331
Ministry of Finance
36,308,905
100,472,455
9,623,702
11,717,135
493,392
525,746
139,418,277
229,908,357
33,513,589
18,298,186
Letters of credit deposits and purchase orders Prepaid expenses
1,205,053
139,912
Prepail expenses
1,226,547
1,258,063
207,918
154,869
Other receivables
Employees receivable
1,104,462
Advances against staff end-of-service indemnity
Total Receivables
Checks under collection **
Other debit balances (refundable deposits and other)
Less: Provision for doubtful debts ***
452,215
175,571,384
249,759,387
(5,220,116)
( 5,220,116)
170,351,268
244,539,271
* The “Governmental institutions and departments” includes amounts due from the following governmental institutions and departments:
December 31,
2009
JD
2008
JD
Royal Jordanian
24,375,032
16,361,242
Jordanian Armed Forces and other security agencies
26,249,610
25,696,397
1,644,740
2,171,490
Central Electricity Generating Company
Water Authority
Ministry of Health
King Hussein Medical Center
Ministry of Public Works
Greater Amman Municipality
Other governmental institutions
12,542,659
2,207,356
2,201,297
549,256
2,697,975
2,312,896
74,780,821
36,992,689
3,954,253
2,905,538
1,188,847
3,113,347
6,991,672
99,375,475
** The maturity dates of checks under collection extend up to January 10, 2010.
84
*** The movement on the provision for doubtful debts is as follows:
December 31,
Balance – beginning of the year
2009
2008
JD
JD
5,220,116
5,350,146
-
(130,030)
5,220,116
5,220,116
Less: debts written-off
Balance – End of the Year
The Company has adopted a policy of dealing with only creditworthy counterparties
as a means of mitigating the risk of financial loss from defaults. The following are the
accounts receivable due but not impaired:
December 31,
2009
2008
JD
JD
1 day – 89 days
94,892,067
114,680,440
90 days – 119 days
19,858,142
76,946,727
2,559,070
25,657,283
117,309,279
217,284,450
The following are due accounts receivable of which some are impaired:
December 31,
2009
2008
JD
JD
12,702,232
8,535,052
More than one year
9,406,766
4,088,855
22,108,998
12,623,907
139,418,277
229,908,357
Total
54th Annual Report
85
5. Crude Oil, Finished Oil Products, and Supplies
December 31,
2009
2008
JD
JD
101,433,990
73,641,643
Crude oil and materials under process
42,575,768
40,219,224
Raw materials, spare parts, and other supplies
47,258,613
47,043,304
Goods in transit
114,443,676
107,275,852
Provision for slow-moving and spoiled inventory **
(22,370,935)
(22,480,094)
283,341,112
245,699,929
Finished petroleum products and lube oil *
* The Concession agreement with the Government expired on March 2, 2008. Consequently, during the year 2008, the Company signed an agreement with the Government to evaluate the strategic inventory and fix it in terms of quantity and value as
of the concession expiry date on March 2, 2008. Accordingly, strategic inventory is
stated as a contra account off-consolidated statement of financial position according
to the quantities and prices prevailing as of that date.
** The movement on the provision for spoiled and slow-moving inventory items is as
follows:
December 31,
Less: Items written-off
86
2009
2008
JD
JD
22,480,094
22,571,490
(109,159)
(91,396)
22,370,935
22,480,094
6. Deferred Tax Assets
Items Resulting in Deferred Tax Assets
For the Year Ended December 31, 2009
Deferred
Tax Assets as of
December 31,
2008
Transferred
to the Statement
of Income
During the
Year 2008
JD
JD
Transferred
to the Statement
of Income
During the
Year
JD
JD
(17,699)
Deferred
Taxes
106,830
(19,505)
JD
(8,222)
783,017
961,687
Year-End
Balance
98,608
(52,201)
1,401,743
12,039
JD
704,342
730,816
(502,684)
224,593
Amounts
Released
(138,703)
5,220,116
899,059
20,545
JD
130,843
-
6,421,849
245,138
Additions
712,202
-
(3,000,000)
1,750,983
JD
5,220,116
76,896
(173,841)
Balance Beginning of
the Year
Provision for doubtful debts
9,344,953
427,537
(13,709)
Provision for staff end-of-service
indemnities
Gas cylinders replacement provision
1,497,287
3,372,014
(12,617)
(240,084)
430,076
910,196
3,131,930
671,328
6,318,273
22,370,935
1,101,404
(111,318)
(109,159)
7,867,170
6,206,955
-
-
44,335,395
22,480,094
2,867,170 5,000,000
(3,421,703)
JD
-
141,182
141,182
Transferred to
Deferred
Tax
the Income
Liabilities as
Statement
of December 31, 2008
Deferred Taxes During the Year
JD
162,102
-
Year-End
Balance
Additions
4,631,473
162,102
Amounts
Released
Balance Beginning of
the Year
JD
-
4,631,473
JD
JD
866,630
-
JD
3,764,843
866,630
JD
42,121,822 5,635,276
Provision for employees vacations
Provision for slow-moving and
spoiled items
Provision for lawsuits
Items Resulting in Deferred Tax Liabilities
Cumulative change in fair value
3,764,843
- The Company is subject to income tax at a rate of 15% whereas the future benefits of deferred tax assets and liabilities have been calculated at 14%
instead of 15% as of December 41, 2009 according to the prevailing income tax rate applicable to industrial companies effective from January 1, 2010.
87
54th Annual Report
7. Available-for-Sale Investments
No. of
Shares
December 31,
2009
2008
JD
JD
626347
2,611,867
1,768,851
47300
1,712,733
1,662,595
128259
302,691
302,691
Jordan Paper and Cardboard Factories Company
33300
37,296
82,584
Public Mining Company
37500
281,250
262,125
Palestine Development and Investment Company
28060
23,683
24,047
4,969,520
4,102,893
Listed Shares:
Jordan Electricity Company
Arab Potash Company
Jordan Dubai Islamic Bank
88
8. Fixed Assets
Projects Totallandexcluding
and
under
Total
construction *** projects under
construction
JD
JD
JD
2,538,831 266,788,036 270,536,675
23,757,319 8,087,417 35,105,107
(2,131,380) (1,311,281) (4,085,039)
0
0
24,164,770 273,564,172 301,556,743
Vehicles
Office
Other
furniture Library and Distribution
training
stations
fixed Computers
and
assets
assets
fixtures equipment
JD
JD
JD
JD
JD
1,764,617 24,708 20,374,375 186,383 3,325,117
87,882
2,175 1,693,095
- 785,437
(48,445)
(66,017)
- (17,120)
1,804,054 26,883 22,001,453 186,383 4,093,434
- 235,935,913 235,935,913
- 7,907,726 7,907,726
- (1,280,142) (1,280,142)
0
0
0 242,563,497 242,563,497
Products
loading
units
20,242 16,659,629 186,383 2,193,747
1,031
786,336
- 815,606
(56,266)
- (17,120)
1,510
21,273 17,391,209 186,383 2,992,233
Electrical
supplies and
equipment
JD
JD
JD
JD
41,367,623 16,359,142 31,799,390 28,031,556
213,031
846,958
295,089
(25,255)
- (1,154,444)
(90,556)
90,556
41,580,654 17,090,289 31,799,390 27,262,757
1,351,779
90,265
(42,785)
(1,455)
1,397,804
Tanks and
pipelines
Production Supporting
machinery
machinery
Lands **
Buildings
and
and
equipment
equipment
JD
JD
JD
JD
1,209,808 17,574,073 72,659,922 33,321,130
3,260,371 2,175,622 1,427,017
561,111
(642,378)
3,827,801 19,749,695 74,086,939 33,882,241
38,802,085 10,945,076 25,510,215 27,433,157
980,403
812,366 2,311,439
178,506
(9,527)
- (1,154,444)
(15,092)
15,092
39,782,488 11,732,823 27,821,654 26,472,311
58,993,246
- 11,989,957 69,345,009 31,498,634
643,537
885,595
402,642
(55)
0 12,633,439 70,230,604 31,901,276
31,000,675
5,610
0 1,131,370 2,538,831
7 - 11
40
-
30,852,123
34,600,762
- 228,420,780 228,420,780
- 8,674,886 8,674,886
- (1,159,753) (1,159,753)
0 235,935,913 235,935,913
0 1,101,201 24,164,770
406,250
3,714,746
10 - 15
4,610,244
790,446
6,289,175
10 - 11
3,977,736
21,960 20,721,073 186,383 1,689,452 2,337,591 257,939,311 261,486,710
2,748
63,880
- 1,636,190 2,914,331 10,050,050 12,964,381
- (410,578)
(525) (2,713,091) (1,201,325) (3,914,416)
24,708 20,374,375 186,383 3,325,117 2,538,831 266,788,036 270,536,675
5,414,066
10 - 15
5,357,466
1,798,166
1,721,166
62,268
(18,817)
1,764,617
19,730 15,812,377 186,383 1,465,370
512 1,234,362
- 728,902
- (387,110)
(525)
20,242 16,659,629 186,383 2,193,747
1,822,496
5 - 15
1,980,965
41,214,678 13,234,737 29,283,616 28,537,922
152,945 3,146,265 2,515,774
162,561
(21,860)
- (668,927)
41,367,623 16,359,142 31,799,390 28,031,556
1,282,111
87,995
(18,327)
1,351,779
3,314,913
9 - 11
3,856,335
37,522,693 10,288,353 23,276,704 27,892,640
1,279,392
678,582 2,233,511
197,210
(21,859)
- (656,693)
38,802,085 10,945,076 25,510,215 27,433,157
5,584,116
2-4
7,116,256
1,209,808 17,235,245 71,391,010 32,702,069
350,051 1,338,307
619,061
(11,223) (69,395)
1,209,808 17,574,073 72,659,922 33,321,130
3,827,801
11,395,063 68,287,136 30,992,220
606,117 1,121,889
506,414
(11,223) (64,016)
11,989,957 69,345,009 31,498,634
4,466
10
0
412,838
10 - 15
1,209,808
-
2,565,538
5 - 15
598,399
15
This item consists of the followings:
Cost :
Additions
Disposals
Transfers
Accumulated Depreciation :
Additions
Disposals
Transfers
Net Book Value as of
December 31, 2009
Cost :
Additions
Disposals
Accumulated Depreciation :
Additions
Disposals
Net Book Value as of
December 31, 2008
Annual Depreciation Rate %
- Fixed assets include fully depreciated assets amounting to JD 191,425,381 as of December 31, 2009 (JD 190,462,631 as of December 31, 2008).
** Additions to land mainly consist of six plots of land bought by the Company, of which four plots have fuel distribution stations erected on them.
*** Additions to projects under construction mainly consist construction projects for liquid gas spherical tanks and benzene and fuel tanks for aircraft.
89
54th Annual Report
9. Due to Banks
This item represents overdraft current accounts granted by several local banks to finance the Company,s activities at interest rates ranging from 7.75% to 8% against the
Company,s guarantee.
10. Accounts Payable and Other Credit Balances
December 31,
2009
2008
JD
JD
Suppliers against drafts and purchase orders
137,934,731
119,378,864
Accounts payable and other credit balances *
51,040,426
47,943,010
Provision for vehicles self insurance **
4,659,678
4,668,861
Provision for replacing gas cylinders (Note 27 b)
6,421,849
9,344,953
Provision for financing cylinders boxes ***
2,255,415
2,255,415
Provision for occupational accidents indemnity
1,488,335
1,251,339
25,588
25,588
7,867,170
2,867,170
27,793,865
19,648,313
-
3,554,976
545,106
-
1,750,983
1,497,287
Municipalities fees *****
9,284,201
6,634,341
439,608
138,212
251,506,955
219,208,329
Deferred revenues
Provision for lawsuits (Note 27 c)
Surpluses and derivatives pricing differences funds ****
Provision for stamps fees and fines
Accrued bonuses
Retentions from contractors
* This item consists of deposits of approximately JD 5.73 million, to the favor of Government, including the financial surplus realized from importing Iraqi fuel after paying
JD 13.6 million to the Ministry of Finance and after calculating the Company,s share
from the compensation for damages relating to the refinement of imported Iraqi fuel.
According to the Ministry of Energy and Mineral Resources letter No. 9/2/2/4113 dated October 6, 2009, the Company has been required to calculate the financial surplus
90
realized from the discount granted to the Government on the imported Iraqi crude oil
since September 2008 up to date and record it to the favor of Government.
** The Company adopts a self-insurance policy on vehicles, and a provision is taken for
the assessed comprehensive insurance premiums on vehicles and their cargo to meet
any liabilities that might arise against the Company due to car accidents.
*** According to the Council of Ministers, resolution No. 58/1/1/4941 dated April 9,
2006, the additional commission on gas cylinders has been raised to fils 50 instead of
fils 25 provided that the commission proceeds are collected in an account maintained
by the Company for financing safety boxes to be distributed to gas distributors. Deducting this commission has been stopped after the adoption of pricing mechanisms
of oil derivatives subject to international prices IPP.
**** This item includes the funds arising from pricing the gas cylinders and petroleum
derivatives price differences between total cost including taxes, fees, and transportation fees and actual selling prices and the rounding-up of fractions effective from
March 2, 2008. This is considered a Government right according to the Ministry of
Energy and Mineral Resources Letter No. 9/4/1/719 dated February 16, 2009 and
Ministry of Finance Letter No. 18/4/9952 dated April 29, 2009. Consequently, the
Company was obliged, effective from March 2008, to record the result of the rounding-up of the prices to the favor of the Ministry of Finance. Additionally, the Government has claimed the differences on the pricing of the petroleum derivatives effective
from December 14, 2008 according to the resolution of the Petroleum Derivatives
Pricing Committee, in its meeting held on December 13, 2008, provided that the pricing surplus be recorded as a deposit under liabilities within the consolidated financial
statements of the Company.
*****According to the Prime Ministry›s resolution No. 58/1/2444 dated February 7,
2008, the pricing mechanisms of oil derivatives, subject to international prices during
the year 2008, were made to include the municipalities fees at 6% of the ex-refinery
price excluding lube oil as per the Municipalities Law No. (14) for the year 2007 instead of one fils per liter applied during the concession period.
11. Provision for Income Tax
The movement on the provision for income tax was as follows:
December 31,
2009
2008
JD
JD
5,386,655
2,056,726
Add : Income tax expense for the year
2,237,887
2,846,090
-
1,489,851
(3,720,225)
(1,006,012)
3,904,317
5,386,655
Income tax for prior years
Less : Income tax paid
54th Annual Report
91
Income tax expense for the year shown in the consolidated statement of income represents the following:
December 31,
2009
2008
JD
JD
Income tax for the year
2,237,887
2,846,090
Less : Deferred tax assets for the year
(691,873)
(1,020,773)
803,191
110,577
Income tax for prior years*
-
1,489,851
Ministry of Finance account*
-
(1,489,851)
2,349,205
1,935,894
Amortization of deferred tax assets for the year
* The Company,s income tax has been settled with the Income and Sales Tax Department up to the end of the year 2007. During the year 2008, the Income and Sales Tax
Department claimed an amount of JD 1,489,851 from the Company concerning the
years 2005, 2006, and 2007. The details are as follows:
Year
JD
2005
441,544
2006
404,511
2007
643,796
1,489,851
During the year 2008, the Company charged the above claims to the Ministry of
Finance›s account as the Company was subject to the concession agreement with the
Government during those years. Moreover, the Government was supposed to bear these
taxes according to the concession agreement, and the taxes should have been offset
against excess earnings for the period from the beginning of the year 2006 until the expiry of the concession. Additionally, the Company has submitted its income tax return
for the year 2008 and paid the tax declared thereon. However, the Income and Sales Tax
Department has reviewed the Company,s records and no final tax settlement has been
reached yet. In the opinion of the Company,s management and tax consultant, the provisions taken in the consolidated financial statements are adequate for the tax liabilities.
92
12. End-of-Service Indemnity
The movement on the provision for end-of-service indemnity is as follows:
December 31,
2009
2008
JD
JD
Balance-beginning of the year
712,202
830,196
Additions during the year
130,843
77,101
Disposals during the year
(138,703)
(195,095)
704,342
712,202
Balance-End of the Year
13. Ministry of Finance - Funding of Strategic Inventory
a. This item represents an interest-free fund granted to the Company by the Ministry
of Finance to finance the strategic inventory.
b. The concession agreement expired on March 2, 2008. Consequently, the Company,
during the year 2008, entered into an agreement with the Government to evaluate
the strategic inventory and fix its quantity and value as of the expiry date of the
concession on March 2, 2008. Accordingly, the strategic inventory has been stated
off-consolidated statement of financial position based on the quantities and values
as of that date.
14. Statutory Reserve
a. In accordance with Article (186) of the Companies Law No. (22) for the Year 1997,
and its amendments, the last of which was provisional Law No. (17) for the year
2003:
- 10% of net income shall be allocated to the statutory reserve every year. The allocation shall not be stopped before the total allocated amount is equivalent to
one quarter of the Company’s authorized capital. However, upon approval of the
General Assembly of the Company, this allocation can continue until the statutory reserve equals the authorized capital.
- If necessary, and as needed, the Company’s Board of Directors can partially use
the balance of the statutory reserve to settle the realized profits due to the Government in excess of the profit percentage specified in the concession agreement
provided that the statutory reserve is rebuilt in accordance with the provisions of
paragraph “a” of this article. During the year 2006, an amount of JD 3,604,977
was transferred from the statutory reserve to the account of the Ministry of Finance to settle the excess earnings for the period from the year 2001 to the year
2005. Moreover, during the year 2009, an amount of JD 1,159,933 was transferred from the statutory reserve to the account of the Ministry of Finance to
settle the excess earnings for the period from the beginning of the year 2006 to
the expiry of the concession dated March 2, 2008.
54th Annual Report
93
b. The movement on the statutory reserve is as follows:
December 31,
2009
2008
JD
JD
17,810,220
16,812,827
1,363,250
997,393
340,355
-
Less: Appropriated from statutory reserves to Ministry
of Finance account against prior years income tax
(1,500,288)
-
18,013,537
17,810,220
Add: Appropriated from net income for the year to
statutory reserve
Appropriated from Ministry of Finance account-settlement of excess earnings to statutory reserves
15. Cumulative Change in Fair Value - Net
December 31,
Cumulative change in the fair value of
available-for-sale investments
Less: Deferred tax liabilities
2009
2008
JD
JD
4,631,473
3,764,843
(162,102)
(141,182)
4,469,371
3,623,661
16. Sales
December 31,
2009
JD
Refinery and distribution sales
2008
JD
1,637,570,165
2,232,651,312
133,767,097
129,546,828
Lube oil factory sales
24,561,644
20,795,937
Transportation fleet proceeds
22,184,913
19,742,857
1,818,083,819
2,402,736,934
Gas cylinders packing sales
94
17. Cost of Sales
Raw Materials:
Crude oil and materials in process - beginning of the year
Purchases of crude oil and raw materials used in production
Less: Crude oil strategic inventory
Crude oil and materials in process - End of the Year
Production Expenses:
Salaries and other employees benefits
Company contribution on death disability fund
Materials, spare parts and other supplies
Fuel delivery
Fuel for vehicles
Other production expenses
Total Production Expenses
Total Production Costs
Add: Petroleum finished products and oil -beginning of the year
Purchases of finished products during the year
Less: Petroleum derivatives strategic inventory
Total Goods Available for Sale
Less: Petroleum finished products and oil – end of the year
Subsidy for crude oil purchases and derivatives charged to the
Ministry of Finance
Government›s surplus / Iraqi crude oil
Petroleum derivatives pricing differences
15,129,990
2,586,836
2,819,304
9,356,434
4,612,110
34,504,674
1,199,194,665
71,490,236
335,849,864
1,606,534,765
(100,194,713)
1,506,340,052
40,005,418
1,167,062,354
(42,377,781)
1,164,689,991
Refinery
and Distribution
JD
(31,009,628)
128,998,448
239,273
33,794
47,587
16,875
133,091
470,620
654,495
159,353,581
160,008,076
160,008,076
4,459
194,151
(14,735)
183,875
Gas cylinders
Packing
JD
18,969,373
899,732
56,659
286,954
94,376
283,143
1,620,864
18,057,243
2,151,407
20,208,650
(1,239,277)
18,969,373
209,347
16,410,284
(183,252)
16,436,379
2009
Lube Oil
Factory
JD
21,771,182
6,093,686
1,200,234
122,723
43,764
10,043,501
3,985,752
281,522
21,771,182
21,771,182
21,771,182
21,771,182
-
Transportation
Fleet
JD
(42,930,067)
19,644,496
79,430,753
1,763,233,865
22,362,681
3,877,523
3,276,568
9,511,449
10,043,501
3,985,752
5,309,866
58,367,340
1,239,677,585
73,641,643
495,203,445
1,808,522,673
(101,433,990)
1,707,088,683
40,219,224
1,183,666,789
0
(42,575,768)
1,181,310,245
Total
JD
(197,873,952)
2,333,638,258
20,880,787
977,201
3,646,157
6,635,170
12,304,803
4,039,870
9,564,410
58,048,398
2,030,976,127
171,245,571
538,819,226
(135,887,071)
2,605,153,853
(73,641,643)
2,531,512,210
65,514,601
1,968,532,584
(20,900,232)
(40,219,224)
1,972,927,729
Total
JD
2008
(11,920,439)
19,644,496
79,430,753
1,593,494,862
95
54th Annual Report
18. Operating Income and Other Income
December 31,
2009
2008
JD
JD
Scrap sales
246,196
487,449
Income from foreign exchange
756,694
811,727
1,438,830
1,126,125
94,919
115,304
1,665,587
1,526,095
-
91,072
4,202,226
4,157,772
Income from the Ports Corporation *
Dividends income
Other income
Cylinders testing fees
* This item represents fees of JD 1,438,830 due to Jordan Petroleum Refinery Company
resulting from the use of the service of the Company›s employees during the year
2009 by the Ports Corporation (JD 1,126,125 during the year 2008).
19. Provisions No Longer Needed
December 31,
2009
2008
JD
JD
Provision for replacement of gas cylinders *
3,000,000
-
Provision for revenue stamps and fines **
1,777,488
-
4,777,488
-
* According to the Company,s Board of Directors› resolution No. (51) dated February
23, 2010, it was approved to reverse JD 3 million from the Gas cylinders replacement provision, representing the amount in excess of the Company’s needs due to the
actual calculation on December 31, 2009.
** According to the Ministry of Finance,s resolution No. 18/4/14965 dated June 30,
2009, it was approved to exempt the Company from 50% of the fines on revenue
stamps fees not fully paid during the year 2008. The remaining amount has been
recorded as revenue in the consolidated statement of income.
96
20. Settlement of the Year 2009 Income
According to Jordan Petroleum Refinery Company›s Board of Directors› resolution
No. 132/2009 dated November 15, 2009, the subject matter of His Excellency the
Minster of Finance,s letter No. (18/4/25741) dated November 15, 2009 was approved
to settle the outstanding financial issues between the Company and both Ministry of
Finance and the Ministry of Energy and Mineral Resources on the following basis:
1. Through the petroleum derivatives pricing mechanisms, annual profit of JD 7.5
million after tax will be achieved related to the refining and distribution activities
taking into consideration that the change in the Company›s expenses is within the
normal ratios.
2. The Lube - Oil Factory,s income referred to item (1) above shall be excluded provided that it is subject to income tax.
3. The Company shall be granted an amount of 10 cents / barrel from the surplus realized for the Government as additional income from refining the Iraqi crude oil.
This consideration is calculated based on the quantity of the barrels received by the
Company provided that this income shall be subjected to tax.
4. Agreement shall be made between the Government’s representatives and Director
of the Audit Committee arising from the Company,s Board of Directors concerning any new provisions or increasing the outstanding provisions. These provisions
shall be reviewed quarterly.
2009, the above items have been approved to settle the financial relationship between the Government and Jordan Petroleum Refinery Company for the year 2009,
the settlement details of the year 2009 income are as follows:
2009
JD
Income before Tax and Fees for the Year 2009
9,965,644
Less: Lube Oil Factory’s income after tax
(3,520,203)
,
The Company s share from the surplus after tax
realized on the Iraqi crude oil refining activity
(263,089)
,
The Company s targeted income
(7,500,000)
Income tax for the year
(2,349,205)
Charged to Government to Reach the Targeted Income
54th Annual Report
3,666,853
97
21. Selling and Distribution Expenses
2009
Salaries and other employees benefits
Company,s contribution in death and disability fund
Spare parts
December 31,
JD
11,514,113
JD
10,225,756
3,719,549
4,208,144
885,250
959,498
2,078,951
2,815,288
Insurance fees
Fees, taxes and stamps
Other selling and distributing expenses
2008
336,572
2,386,426
23,736,149
240,036
1,923,121
665,931
2,092,996
20,315,482
22. General and Administrative Expenses
December 31,
2009
Salaries and other employee benefits
Company,s contribution in death and disability fund
Donations
Postage and telephone
JD
3,494,116
251,499
265,356
574,168
188,662
Stationery and printing
145,172
911,609
End-of-service indemnity provision
130,843
Advertisements
213,133
Technical and legal consultations
Maintenance and repairs
Rents
Water and electricity
Professional fees
98
820,585
77,101
134,051
144,214
126,758
55,895
47,322
75,491
324,196
48,200
55,000
92,315
Other general and administrative expenses
135,936
205,487
22,312
Insurance premiums
158,936
708,445
34,647
Subscriptions
414,413
855,352
127,733
Cars expenses
2008
JD
4,605,935
909,621
9,392,179
75,448
723,503
7,761,275
23. Settlement of 2008 Expenses
2009, it was approved to settle the financial relationship between the Government and
the Jordan Petroleum Refinery Company for the year 2008 through transferring JD
3 million by the Company to the Ministry of Finance as final settlement for the year
2008 income.
24. Other Expenses – Net
December 31,
2009
JD
2008
JD
Additional universities fees
136,325
99,739
Provision for scientific research and vocational training
136,325
99,739
95,874
60,000
67,949
46,300
-
7,580,373
4,200,027
428,524
12,094,127
Provision for Technical and Vocational
Training Support Fund fees
Board of Directors, remuneration
Expenses for the settlement of the expiry of the
concession with the government (Note 30)*
Fees, taxes, fines, and imports stamps
* This item consists of the following:
December 31, 2008
JD
Cumulative change in fair value as of March 2, 2008
6,197,008
Settlement of excess earnings
1,383,365
7,580,373
25. Earnings Per Share
Earnings per share are calculated by dividing net income by the weighted average
number of shares during the year as follows:
2009
December 31,
JD
Income for the Year
10,854,768
Earnings Per Share
0.339
Weighted Average Number of Shares
54th Annual Report
32,000,000
99
2008
JD
7,724,317
32,000,000
0.241
26. Fair Value Hierarchy
The following table analyzes the financial instruments recorded at fair value according to the evaluation method at different levels defined as follows:
- Level 1: Quoted prices (unadjusted) for identical assets and liabilities.
- Level 2: Information not included in level (1) advertised prices mentioned for the
asset or liability, either directly (e:g. Prices) or indirectly (i.e. derived from prices);
- Level 3: Information on the asset or liability not based on those observed from the
market (unobservable inputs).
December 31, 2009
Level 1
Level 2
Level 3
Total
JD
JD
JD
JD
4,969,520
-
-
4,969,520
4,969,520
-
-
4,969,520
Financial instruments:
Available-for-sale investments
27. Contingent Liabilities and Financial Commitments
a. As of the consolidated statement of financial position date, the Company was contingently liable and financially committed as follows:
December 31,
Letters of credit and bills of lading
Letters of guarantee
Contracts for projects under construction
2009
2008
JD
JD
278,120,842
298,317,783
484,335
785,230
15,203,092
37,705,056
b. The number of gas cylinders in circulation is estimated to be (4.5) million cylinders. According to pertinent regulations, the Company will be charged with the
value of replacing damaged cylinders. As a result, the Company is building a gradual provision for the damaged cylinders to be replaced in the future. The provision
balance is included in «Accounts payable and other credit balances».
c. On July 12, 2006, and during the concession period, an accident occurred to a gas
ship tanker that resulted in legal claims being filed claiming compensations at Aqa-
100
ba Court of First Instance against the Company and the ship tanker›s captain by
the four deceased persons, heirs, the Ports Corporation, and the Jordanian Armed
Forces. On March 11, 2009, the said court issued its verdict by holding both parties
responsible, detaining the tanker, and disallowing it from traveling. The verdict
was appealed at M’ain Appellate Court, which issued its final verdict on June 1,
2009, endorsing the court of First Instance verdict, thus rendering it irrevocable.
The ship owner filed an arbitration case in London claiming USD 28 million as
compensation. Moreover, the Company presented its arguments on the unavailability of an arbitration agreement and the non-specialization, successively. Additionally, the ship owner filed a marine attachment lawsuit at South New York
Court. In its turn, the Company granted power of attorney to international legal offices in New York and London to follow up on the attachment case and arbitration
case. This resulted in the lifting off of the attachment on the Company,s funds in
New York. Consequently, the above court cancelled the previous attachment decision dated November 19, 2009. At the end of the year 2009, the arbitration case in
London was seized based on both parties, consents due to ongoing reconciliation
negotiations between the two parties.
In light of the above, and based on the legal consultants› opinion, the Company,s
management believes that no additional provisions are needed concerning this case.
There are lawsuits in courts raised against the Company claiming amounts estimated at JD 3,500,000 as of December 31, 2009. Some of the current lawsuits
originated in prior years and have been filed against both the Government and the
Company. The contingent liabilities arising from unsettled lawsuits have been estimated, and provisions have been taken in accounts payable and other credit balances. Based on the opinion of the Company,s management and its legal consultant,
no additional provisions are needed in the accompanying consolidated financial
statements concerning this matter.
d.According to the Customs Duties Law No. (20) for the year 1998, the Company’s
purchases from petroleum products have been subjected to customs duties, and its
sales, to sales tax in accordance with the General Sales Tax Law No. (6) for the year
1994 and its related amendments. As a result, the Company has raised its objection
to the related governmental parties. In accordance with the Ministry of Finance
Letter No. 18/4/2927 dated March 23, 2004, the financial relationship between the
Government and the Company entails that the Company should transfer the surplus
in its earnings (net of both costs and shareholders’ dividends) to the Ministry of Finance. Consequently, the amounts claimed from the Company by the Department
of Customs Duties, representing customs fees and sales tax on petroleum products
imported by the Company for the years from 1999 until December 31, 2003, have
been transferred to the General Treasury account through the weekly payments
made by the Jordan Petroleum Refinery Company to the Ministry of Finance.
According to the Minister of Finance›s Letter No. 12/1/37/11772 dated October 30,
2005, collection of customs duties has been deferred according to the documents
submitted directly by the Company and is to be effective as of the beginning of the
year 2008 when due.
54th Annual Report
101
According to the Minister of Finance’s Letter No. 12/1/27/1781 dated January 27,
2008, collection of customs duties has been deferred until the expiry of the concession period on March 2, 2008. Moreover, the collection of customs duties has been
deferred until December 31, 2010 according to the Prime Minister,s resolution No.
12/11/4/5141 dated March 11, 2010.
According to the resolution of the Prime Ministry No. 12/11/4/2439 dated February 7, 2008, it was approved to levy sales tax on unleaded fuel, as stated below,
effective from February 8, 2008:
1. To adjust the exemption rate on unleaded benzine (Octane No. 90) to become
12% according to the provisions of Article (22/c) of the General Sales Tax Law
No. (6) for the year 1994 and related amendments so that this product becomes
subject to general sales tax at a rate of 4%.
2. To cancel the exemption rate on unleaded benzine (Octane No. 95) according to
the provisions of Article (22/c) of the above general Sales Tax Law so that this
product becomes subject to general sales tax at a rate of 16%.
28. Due to the Disability, Death, and Indemnity Fund
The Company’s liabilities for this fund is estimated at JD 25,983,164 on the assumption that the services of the Company’s employees are terminated all at the same time
(JD 20,777,970 as of December 31, 2008). During the year 2007, a net amount of JD
6,116,931 was transferred to the Fund, and the Company’s liabilities net balance as
of December 31, 2007 became JD 14,604,217. According to the Board of Directors›
resolution No. (132) dated September 9, 2008, it was agreed to borrow JD 3 million
from the Fund at a rate of 7.5%. Consequently, the net balance due to the Fund became JD 17,822,000 as of December 31, 2008. According to the Board of Directors›
resolution No. (7) dated April 14, 2009, it was approved to adjust the Death and Disability Fund Regulations through an increase of JD 100 per bracket and record such
adjustment as an obligation to the Fund. Accordingly, the amount due to the Fund
has become JD 23,099,530 as of December 31, 2009. Moreover, the Fund›s assets
and liabilities of JD 25,983,164 have been recorded as off-consolidated statement of
financial position.
Moreover, the Fund has special regulations whereby the Company’s employees,
since the Fund’s establishment in the year 1987, have been co-financing this fund
through monthly subscriptions. According to the Fund’s regulations, the Company
pays its dues relating to any deficit that may arise upon settlement of these debts annually.
29. Related Parties Balances
The details of the transactions with related parties are as follows:
102
December 31,
Ministry of Finance (Debit)
Ministry of Finance – Funding of strategic inventory
2009
2008
JD
JD
36,308,905
100,474,207
156,787,303
156,787,303
December 31,
Ministry of Finance – Fuel subsidy
2009
2008
JD
JD
42,930,067
197,873,952
3,666,853
-
Ministry of Finance – Iraqi crude oil
(19,644,496)
-
Ministry of Finance – Difference in oil derivatives pricing
(79,430,753)
-
Ministry of Finance – Settlement of the year 2009 income
Moreover, executive management and members of the Board of Directors, salaries
and remunerations amounted to JD 557,411 for the year 2009 (JD 571,524 for the year
2008).
30. Settlement Agreement with the Government Relating to the Expiry of
the Concession Granted to the Company
In light of the expiry of the Company’s concession and the necessity to settle all
related issues including financial settlement and determination of the Company’s
future after the concession expiry, and in reference to the Prime Minister’s Letter
No. 58/11/1833 dated January 28, 2008 on conducting the concession termination
bargains, the Company signed a settlement agreement with the Government relating to the expiry of the concession agreement on February 25, 2008. The details
are as follows:
a. The Company shall be granted part of the distribution activity (one of the four
companies to be licensed) representing 25% of the market share as a minimum provided that this company is separate from but owned by Jordan Petroleum Refinery
Company (JPRCO) and that all the conditions will be applied on the other three
distributing Companies according to a licence agreement for this purpose. Moreover, the Company’s assets shall include the (five) gas stations owned by JPRCO.
54th Annual Report
103
b. One logistics company shall be set up in Jordan whereby the Government’s share
in this company is 51%, and JPRCO’s share is 49% upon its establishment. Moreover, this company shall operate on the basis of the free system of using the logistical facilities (This Company is not entitled to trade in or import fuel derivatives).
The Government and JPRCO shall be obliged to sell part of their shares in this
company according to the Government’s program for restructuring the oil sector
by opening it up for competition, and separating and evaluating assets as follows:
1. JPRCO shall be obliged to sell 29% of the logistics company’s capital to the
operator (private sector) so that its share becomes 20% of the logistics company’s capital. Furthermore, the Government shall be obliged to sell 31% of
the logistics company’s capital to the operator so that its share becomes 20%
of the logistics company’s capital and the operator’s share becomes 60% of the
logistics company’s capital.
2. All JPRCO’s facilities and assets in the new location in Aqaba / Southern Area,
erected on a plot of land with an area of 251,820 dunums rented to JPRCO by
Aqaba Special Economic Zone Authority / Aqaba Development Company, shall
be separated, and so shall all the facilities and assets of JPRCO in Queen Alia
International Airport, King Hussein Airport, and Maraka Civil Airport from
the facilities and assets of JPRCO. These facilities and assets in Aqaba and the
airports shall be considered part of the logistics company’s facilities and assets.
3. 51% of the logistical assets transferred to the logistics company shall be charged
to the Government for the benefit of JPRCO ( as per item 2 above). This percentage is considered the Government’s share in the logistics company upon its
establishment.
4. All shares mentioned in item (1) above, including the option to sell the remaining Government’s share, shall be sold according to the Government’s program
for restructuring the oil sector and establishing and licensing the logistics company. Moreover, JPRCO shall be obliged to sell its share, mentioned in item
(1) above which represents 29% of the logistics company’s capital, at the same
time the Government sells its share of 31% of the logistics company’s capital
through competitive bidding offered by the Government for selling 60% to the
operator (new buyer from the private sector). Moreover, both the Government
and JPRCO shall receive the value of their sold shares according to the sale
value charged to the operator (private sector).
5. The Government and JPRCO shall comply with all the requirements for establishing the logistics company and its tasks. The logistics company shall
be responsible for securing future storage capacities to serve the distribution
companies in all parts of the Kingdom during its licence term and ensure the
availability of the necessary storage capacity for the strategic inventory.
6. The logistics company is considered the legal successor of JPRCO in connection with the rights and obligations on the executed tenders relating to the facilities mentioned in item (2) above, and shall charge the Government to the favor
of JPRCO the equivalent of 51% of the tenders value and 49% of the tenders
value to JPRCO.
7. Settlement of the working employees’ rights and addressing their conditions
are performed according to the pertinent laws and regulations in effect.
104
c.JPRCO’s ownership of the constructions, facilities, equipment, and accessories on
the Company’s premises in Aqaba / old site / phosphate pavement shall be retained
by JPRCO. Moreover, the request of Aqaba Special Economic Zone Authority
(ASEZA) / Aqaba Development Company relating to the ownership of the site and
what is constructed on it shall be left to JPRCO to deal with. In its Letter No. th
b/b/11870 dated July 1, 2007, addressed to the Prime Minister, ASEZA requested
reconsideration of the resolution of the Council of Ministers concerning ownership
of these facilities for the purpose of selling them to the logistics company in order
to enable Aqaba Development Company to translocate the main port facilities and
equipment to the new site in the southern coast. JPRCO shall manage these facilities according to the free usage regulations to empower the distribution companies
to supply the ships with fuel until the logistics company makes available new facilities to enable the distribution companies to supply ships with fuel. d. JPRCO’s ownership of the petrol derivatives haulage facilities at the Refinery /
Zarqa shall be retained as these facilities cannot be technically separated. Moreover, JPRCO shall manage these facilities according to the free usage regulations
for a transitional period provided that the necessary improvements and upgrading
of these facilities are executed in accordance with the international requirements
until the logistics company is empowered to build its own haulage facilities. After
the transitional period, work of these facilities shall be limited for JPRCO’s purposes.
e. JPRCO’s ownership of the liquid petrol gas containering facilities in Zarqa, Amman, and Irbid shall be retained provided that a company independent from and
owned by JPRCO is established for the management of these facilities. Moreover,
the Government shall be entitled to open the liquid petrol gas market for competition effective from the expiry date of the concession.
f. JPRCO shall make available the storage capacities in excess of its needs in Zarqa,
for the benefit of the logistics company, on a commercial basis for a transitional
period until the logistics company sets up its own storage and haulage facilities.
g. JPRCO shall continue to store its crude oil in tanks No›s. 70, 15, and 71 with an
approximate capacity of 68,000 tons allocated to store crude oil on JPRCO’s site
(new site in Aqaba). The facilities and assets of the site shall be handed over to
the logistics company without paying the logistics company any additional costs
aside from the current costs estimated at JD 1.5/ton/month for utilizing the abovemention tanks. JPRCO shall continue to use these tanks as arranged until alternative storage capacities are made available by Aqaba Development Company /
Integrated Oil Port Project.
h. Approval of the financial settlement relating to the expiry of the concession according to the report of the financial specialist hired by the Government is as follows:
54th Annual Report
105
Description
Final Status
The balance of profit appropriations to the
statutory reserve of JD 1.383 million
Government’s right
Value of cumulative change in
investments (shares)
Government’s right. The value is
determined upon the concession expiry date
Value of interest paid on the bridge loan of
JD 30 million
Agreement on retaining it for JPRCO
Value of distributed profits (16%) on the difference between capital of JD 32 million and actual paid-in capital
of JD 30,566 million for the period (1981 – 2007)
Agreement on retaining it for JPRCO
Strategic inventory
Government’s right according to actual valuation
upon the concession expiry date
Operating stock
Government’s right of evaluating it according to the
prevailing international prices on the concession
expiry date.
Provision for doubtful debts
Recoveries of these debts shall be paid to Government
Provision for staff end-of-service indemnity
This relates to the Company’s employees who will
be transferred to the other companies
This relates to the Company’s employees who will
be transferred to the other companies
Provision for gas cylinders
This shall be the right of the party that will take responsibility of replacing the citizens gas cylinders
Provision for slow-moving and spoiled
inventory items
An independent study shall be conducted to evaluate slow-moving and spoiled inventory item. The
difference shall be recovered from Government.
Capital projects
Agreement on retaining it for JPRCO.
The above amounts have been estimated in light of and at the date of the financial
report. The final amount of the above items shall be adopted according to JPRCO’s consolidated financial statements at the date of the expiry of the concession,
and the final financial settlements shall be prepared accordingly.
j. JPRCO shall make available the petrol derivatives needed by the kingdom until
the logistics company, the distribution companies, and the new liquid petrol gas
106
companies commence their operations according to the “Agreement on Petrol Derivatives Distribution, Storage, Import, and Availability”.
k. The distribution / marketing companies shall be obliged to purchase 75% of the
Refinery’s production of light petrol derivatives. Moreover, fuel oil shall be exclusively sold by JPRCO until the completion of its expansion project and operating
it commercially no later than the year 2011 extendible for a year upon both parties
approval. This shall be considered cancelled in case JPRCO does not complete its
program for commencing the execution of the expansion project through attracting
a strategic partner and/ or a financial partner and / or increasing capital no later than
December 31, 2008 or any extension approved by both parties.
In accordance with the resolution of the Prime Ministry No. 58/11/1/2634 dated
March 2, 2008, it was agreed to:
1. Approve the settlement agreement signed on February 25, 2008 between the
representatives of the Government (the Minister of Finance and the Minister of
Energy and Mineral Resources) and JPRCO’s representative (JPRCO’s Chairman of the Board of Directors) concerning termination of JPRCO’s concession
including the financial settlement stated in the agreement.
2. Approve the import, storage, insurance, and distribution services of the petrol
derivatives agreement signed on February 25, 2008 between the Government’s
representative (Minister of Energy and Mineral Resources) and JPRCO’s representative (JPRCO’s Chairman of the Board of Directors).
3. Commence work on the above-mentioned agreements effective from the expiry
of the concession. These agreements shall be considered cancelled in case
JPRCO’s General Assembly does not approve them. Moreover, the resolution
of the Council of Ministers No. 4487 dated June 5, 2007 shall be effective for
separating and owning the logistics, distribution, and liquid petrol gas facilities
belonging to JPRCO. Its assets shall be relocated to the new companies which
shall be licensed according to the Government’s plan for restructuring the oil
sector.
4. Complete the necessary procedures for signing the licensing agreement with
JPRCO in light of the above settlement.
According to JPRCO General Assembly’s resolution in its extraordinary meeting held on March 22, 2008, it was agreed to:
Approve the settlement agreement with the Government on the termination of
the concession on February 25, 2008.
b. Approve the segregation of the Company’s activities through establishing companies wholly or partially owned by JPRCO and authorizing the Board of Directors to do all what is necessary in this regard.
c. Amend the Company’s internal regulations to comply with the Company’s legal
status given the expiry of the concession.
During the year ended December 31, 2008, the Company established two sub-
54th Annual Report
107
sidiaries wholly-owned by Jordan Petroleum Refinery Company, namely: Jordan
Liquid Gas Manufacturing and Packing Company and Jordan Lube-oil Manufacturing Company in preparation of segregating the activities of gas packing and
lube-oil manufacturing. Moreover, these two companies have not yet conducted
any commercial activities. Additionally, the Company is still in the process of segregating the Company›s other activities.
31. Risk Management
The Company adopts financial policies for managing the various risks within a specific strategy. Moreover, the Company’s management controls and monitors risks and
performs the optimal strategic allocation of financial assets and financial liabilities.
Risks include interest rate risk, market risk, credit risk, and foreign currency risk.
1. Capital Risk Management
The Company manages its capital to ensure its ability to continue as a going
concern and maximize the return to stakeholders through achieving an optimal
balance between equity and debt. Moreover, no change in the Company’s overall
policy has occurred since the year 2008.
2. Liquidity Risk
Liquidity risk, also known as funding risk, represents the difficulty that the Company will encounter in making available the necessary funds to fulfill its obligations. Moreover, the Company manages its liquidity risk through keeping adequate reserves, continuously monitoring the expected and actual cash flows, and
matching the maturities of financial assets and financial liabilities.
3. Credit Risk
Credit risk relates to the other party’s inability to meet its contractual obligations
leading to the incurrence of losses by the Company. Moreover, the Company
adopts a policy of dealing with creditworthy parties in order to mitigate the financial losses arising from defaults.
The Company’s financial assets consisting mainly of accounts receivable, available-for-sale financial investments, and cash and cash equivalents do not represent important concentrations of the credit risk. Furthermore, the debtors are
wide spread among the clients’ categories and their geographic areas. Strict credit
control is maintained over the credit limits granted to each customer separately
on a continuous basis.
- All of the Company’s investments are classified as available-for-sale financial
assets.
- The risk related to the investment in shares relates to the change in the value of
the financial instrument as a result of the changes in the closing prices of shares.
108
The change in the financial market index whereby the above securities are traded as of
the consolidated financial statements date represents a 5% increase or 5% decrease. The
following is the impact of the change on the Company’s shareholders’ equity.
2009
5% Increase
5% (Decrease)
December 31,
2008
JD
JD
248,476
205,145
(248,476)
(205,145)
4. Market Risk
Market risk is the loss in value resulting from the change in market prices such as
interest rate, foreign currency exchange rate, and equity instruments prices, and
consequently, the change in the fair value of the financial instruments cash flows
on-and off-the consolidated statement of financial position.
a. Currencies Risk
The Company’s major transactions are in Jordanian Dinar and US Dollar. The
following are the book values of the Company’s financial assets and financial
liabilities denominated in foreign currencies as of December 31, 2009 and
2008:
December 31,
Assets - US Dollar
Liabilities - US Dollar
2009
2008
JD
JD
12,358,057
7,742,997
198,958,605
86,771,135
Currency risk relates to the changes in the prices of currencies in connection
with foreign currency payments. As the Jordanian Dinar is pegged to the US
Dollar, the Company’s management believes that the foreign currency risk is
immaterial.
b. Interest Rate Risk
Interest rate risk is the risk of change in the value of the financial instrument
due to changes in market interest rates.
Moreover, the Company continuously manages its exposure to interest rate
risk and considers the various scenarios such as refinancing, renewal of the
present positions, and alternative financing.
54th Annual Report
109
The below-mentioned sensitivity analysis is determined according to the exposure to interest rate risk related to the lending banks as of the consolidated
financial statements date. Moreover, the analysis has been prepared assuming
that the liability amount at the consolidated financial statements date was outstanding during the whole year. An increase or decrease of half a percentage
point (0.5%) is used, representing the evaluation of the Company’s management of the potential and acceptable change at market interest rates:
December 31,
0.5% Increase
2009
2008
JD
JD
(760,843)
(1,075,730)
760,843
1,075,730
0.5% Decrease
32. Sectorial & Geographical Distribution
Information on geographical and sectorial distribution:
- The Company is organized, for management purposes, into four major business
sectors.
- Refining: This sector separates the components of imported lube-oil into a set of
varied oil products according to international specifications.
- Distribution: Distribution links the production activity and refining activity on
one hand, and all customers in the various areas of the kingdom, on the other.
Moreover, distribution fulfills customers› demands on the Company›s petroleum
derivatives and gas.
- Manufacturing of Lube-oil: This sector includes the manufacturing and production
of several types of oil required in the local market.
- Manufacturing and Packing of Liquid Oil: This sector includes manufacturing,
repairing, and maintaining gas cylinders.
All of the Company,s assets, liabilities, and operations are inside the kingdom of
Jordan.
The following are the Company,s activities distributed according to activity type:
Total
December 31,
Refining &
Distribution
JD
Income before tax
Manufacturing &
Packing of Liquid Manufacturing of Transportation
Gas
Lube Oil
Fleet
Others
2009
JD
JD
2008
JD
JD
JD
JD
8,808,759
(18,128)
4,513,490
413,731
172,961
13,890,813
9,660,211
505,048,561
759,395
15,414,973
4,768,182
8,582,622
534,573,733
542,088,186
(451,788,534)
(2,369,475)
(10,901,483)
-
-
(465,059,492)
(476,714,490)
Other Information
Total sector›s assets
Total sector›s liabilities
110
33. Future Expansion Plan
The Board of Directors approved the fourth stage of expansion estimated cost of
USD 1 billion in order for the Company to continue its operation and to obtain offers from a strategic partner to finance this project. During the year 2008, two offers
have been received from two joint venturers. The offers were submitted provided
that certain privileges are obtained from the Government. However, the Government
did not agree on this matter as it contradicts the Government,s strategy to liberate the
energy sector. This led to the withdrawal of important members from the two joint
ventures. Consequently, the Company›s Board of Directors decided to inform the
two joint ventures of the termination of negotiations in order to allow other investors who expressed their willingness to enter as partners. In addition, an alternative
plan has been made to execute the project,s expansion through raising capital by the
Company itself and secure the necessary funding in case efforts to attract the strategic partner fail. On April 5, 2009, a Memorandum of Understanding was signed
with an investor interested in entering as a strategic partner with the Company for
3 months. During this period, the investor would study the Company›s status and
discuss related matters with the Government in preparation of submitting his technical and financial offer. On July 2, 2009, the Company received a financial, technical, and legal offer from the above investor within the grace period according to the
Memoradum of Understanding signed on April 5, 2009. The offer included raising
the Refinery›s refining capacity to 150,000 barrels per day. The project costs are estimated at USD 2.1 billion. Moreover, the expansion project shall be financed through
the investor,s subscriptions in the Company’s new shares and through obtaining the
necessary funding from local and international funding resources.
The offer included a set of requirments from the Government to ensure the success of
the 4th expansion project and to secure the necessary funding. Additionally, the Board
of Direcotrs decided not to accept this offer in light of the issuance of the Council of
Ministers› resolution No. 5954 dated September 1, 2009 which includes approval for
the Jordan Petroleum Refinery Company to invite the companies that have submitted
their offers and expressed their interest in strategically partnering with the Company
to execute the 4th expansion project on the basis of an exclusively ‎period of 15 years
at maximum of which 5 years are for executing the Refinery,s expansion project.
This is followed by 10 exclusive years after executing the 4th expansion project provided that this limited period is granted according to the agreement which shall be
made between the Government and the Company according to the terms and criteria
to be agreed on at that time so as to enable the Company to negotiate and attract the
interested investors accordingly. Consequenlty, the financial consultant « Citigroup»
sent expression-of- interest letters to 12 investors to confirm their interest in entering
as strategic partners. Their final replies were due on October 30, 2009. The deadline
has been extended to November 27, 2009 due to the inadequacy of the period upon
the investors, request. On December 15, 2009, the Council of Ministers resolved to
suspend implementation of resolution No. (5954) and to form a ministerial committee to study the Refinery,s measures to attract the partner and the exclusivity granting conditions. Moreover, the Ministerial Committee decided to appoint a financial
54th Annual Report
111
,‎ legal, and technical consultants to advise the Ministry of Finance and Ministry of
Energy concering the exclusivity agreement and related negotiations.
34. Comparative Figures
Some of the comparative figures for the year 2008 have been reclassified to correspond with the classification of the year 2009 figures. Such reclassifications do not
affect the prior year’s results of operations.
112

Jordan Petroleum Refinery Company

Transcription

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