LAHORE (PR) Pakistan State Oil (PSO), the leading oil marketing company of Pakistan, convened its Board of Management (BoM) meeting on April 19, 2019 to review the performance of the company for nine months period from July to March for financial year 2018-19. Despite numerous challenges, PSO maintained its leadership position in the liquid fuels market with an overall share of 40.8% (White Oil 39.2% and Black Oil 48.2%) during the period under review. PSO also maintained the supply chain by importing 47% of total industry imports and uplifting 35% of total refinery production in the country to ensure an uninterrupted fuel supply to its customers. The company has earned a profit after tax (PAT) of Rs. 5.9 billion for the period under review. Major reasons for reduction in PAT is lower gross profit due to dip in sales volume of black and white oil due to reduction in industry volumes and inventory losses due to rise in international prices, lower interest income from power sector, increase in finance cost due to a sharp rise in the discount rate from the SBP, and higher average borrowing levels vs same period last year.
The black oil volumes declined primarily due to power production shift towards RLNG whereas drop in white oil volumes include access to smuggled product, decline in automobile sales vs. same period last year, and decrease in contribution from agriculture and large scale manufacturing (LSM) sector towards GDP.
During March 2019, the government of Pakistan partially settled the mounting circular debt through a payment of Rs. 60 billion, however, receivables from SNGPL increased by Rs 40 billion vs. June 2018. The outstanding receivables (inclusive LPS) of Rs. 278 billion as of March 31, 2019 from the power sector, PIA and SNGPL against supplies of Furnace Oil, Aviation Fuels and LNG respectively continues to place enormous liquidity pressure on the organization.
However, despite stiff competition in the industry, PSO is determined to make strong efforts to improve its market share with sustained profitability. Some of the initiatives PSO is focusing on are enhancement of storage capacity, expanding retail network, upgrading existing retail infrastructure and increasing lubricants availability throughout the country.