[dropcap]F[/dropcap]or the past 39 years, Pakistan State Oil (PSO) has been fueling the needs of the state and acknowledged as the leading public sector company of Pakistan, the company has been driving the wheels of the nationwide economy.
It is the first public company to pass the 1 trillion rupee revenue mark. Presently the management of company is engaged in the marketing and distribution of various POL products counting Motor Gasoline (Mogas), Furnace Oil (FO), Jet Fuel (JP-1), High Speed Diesel (HSD), Kerosene, LPG, CNG, Petrochemicals and Lubricants.
PSO has the most wide-spread retail network in Pakistan with over 3,500 retail outlets and is also the main fuel supplier to aviation, railways, power projects, armed forces, marine and agriculture sectors. PSO also possesses Pakistan’s largest storage capacity representing approximately 68 percent of the nation’s total storage capacity.
PSO’s commitment to the energy security of the country has been enhanced by diversification into LNG (Liquefied Natural Gas) as a fuel for energy generation and other sectors. As a viable solution to Pakistan’s present energy issues, LNG is a game-changer and would result in savings of billions of dollars for the national exchequer.
During the first quarter (1Q) of FY2016-17 (FY17), PSO sustained its market leadership position with an overall market share (liquid fuels) of 56.5 percent (1QFY16: 56.9%). Market share of 75.2 percent (1QFY16: 71.1%) in Black oil and 42.7 percent (1QFY16: 47.2%) in White oil was recorded during the period under review.
Measures are being taken to enhance the White oil market share. PSO’s profit after tax (PAT) was Rs4.4 billion which is 35 percent higher than PAT of Rs3.3 billion for 1QFY2016. The rise in PAT was because of growth of 17 percent recorded in the liquid fuel sales (White oil and Black oil) over SPLY (same period last year). There was a rise of 2.9 percent in White oil sales and 31 percent in Furnace oil sales over SPLY.
Gaseous fuels business has shown improvement with rise in sales volume of LPG by 134 percent and LNG by 107 percent over SPLY.
Moreover, a rise in inventory gains along with decline in finance cost by 32 percent on account of fall in markup rates and a rise in FE-25 borrowings also contributed to rise in PAT. However, the mentioned rise was partially offset by decline in black oil margins because of declined price of black oil and nil LPS income from IPPs/PIA vs. Rs. 0.75 billion during SPLY.
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The management continues to maintain inventory levels to keep the wheels of Pakistan moving, hence is exposed to inventory gain/loss.
The Regulator needs to ensure that OMCs supply product on a consistent basis throughout the month and not retain volume during the price rise situation.
The recovery of the outstanding receivables of Rs249 billion (June 30, 2016: Rs233 billion) from the energy sector, PIA and SNGPL against supplies of FO, Aviation Fuels and LNG remains a challenge in the wake of rising global oil price. However, the Management continues to work closely with the Ministry of Water & Power and PIA for timely realization of due payments against uninterrupted fuel supply by Pakistan State Oil to support the energy sector and continued airline operations.
Efforts are also being made to recover Rs3.8 billion from OMCs and CNG dealers.