Karachi: The Board of Management (BoM), Pakistan State Oil (PSO) on Tuesday, April 22, 2008 reviewed the financial results of the company for the nine months ended March 31, 2008. Sardar Yasin Malik, BoM Chairman, presided over the meeting.
During the third quarter PSO sales volume recorded 18% growth and was able to enhance its overall market share to 70.6% compared to 68.8% in the same period last year. The company outperformed its competitors by recording 29% increase in White Oil sales volume against industry growth of 22%, whereas Black Oil sales increased by 9% versus industry growth of 6%. The company also improved its market share in Motor Gasoline from 45.7% to 48.6%, while High Speed Diesel market share increased from 58.1% to 62.9%. In Furnace Oil, the company maintained its leadership with 83.4% market share
During the nine months under review PSO sold over 9.5 million tons of POL products, translating into an all time high sales turnover of Rs 394 billion - an increase of 36% over prior year. The company consequently recorded a healthy growth in both, profit before tax at Rs. 13 billion and profit after tax at Rs. 8.5 billion mainly due to higher sales volume as well as inventory gains during the period. In the comparative period of last year profit before and after tax were Rs 3.3 billion and Rs 2.1 billion respectively.
During the review period, crude prices witnessed a surge of around 40% over last year’s corresponding period. The major factors for this upsurge were the US Dollar weakness against major currencies (especially the Euro), increased financial market speculation and ongoing geo-political developments and perceived supply constraints. The above factors accompanied with investment flows in commodity markets, particularly for crude, added to bullishness and pushed crude oil prices to peak at US$ 102.88/bbl during the period.
The rising oil prices resulted in higher cost of purchases for the oil marketing companies and the government finally announced two price increases in the refined product prices during March 2008. This was to partly address the ever growing subsidy on product prices. The very high rate of subsidy through Price Differential Claim (PDC) on diesel is a matter of great concern to your company in particular and to the industry in general as it has drained out the entire liquidity causing delays in payments to suppliers.
The PDC receivable as at March 31, 2008 stood at Rs 31.5 billion despite reimbursements of Rs 12 billion in November 2007 and Rs 15 billion in February 2008 through government guaranteed finance arrangements. In addition to PDC, PEPCO and PIA have also substantially delayed on timely payments to PSO thereby further aggravating the liquidity position.
Looking ahead the Board is concerned over the present liquidity position of the company and hope that the GOP and other government organizations like PEPCO and PIA will make the payments to PSO in a timely manner. This is imperative for continuation of smooth supplies of products within the country.