Magazine article Economic Review

PSO: A Cherished Past, a Promising Future

Magazine article Economic Review

PSO: A Cherished Past, a Promising Future

Article excerpt

* As part of its customer-focused approach. PSO recently extended its product line of lubricants, introducing products/br the segments that were previously untapped.

* As the largest oil marketing company in Pakistan, we have taken care of our corporate social responsibility, emerging as a socially responsible company that strongly believes in integrating social, economic and environmental aspects.

* As the era of deregulation has beckoned, we are responding fast to the changing market conditions. For this, we have overhauled our strategies and harnessed our strengths to stay ahead of the competition.

Petroleum products' marketing is a challenging business that, like other professions, requires foresight, acumen, quick judgement and hard work. At PSO, we have been breaking new grounds since our inception. By introducing an exciting product portfolio, meeting our corporate social responsibility, setting up storage depots at far-flung areas, presenting innovative marketing techniques, energizing industrial institutions, supporting the country's armed forces, ensuring customer satisfaction and meeting new business challenges. PSO has been setting the benchmark for other oil marketing companies during the 25 years of its existence.

In its present form, Pakistan State Oil (PSO) was formed on December 30th, 1976 through a reorganization plan implemented by the Government of Pakistan in pursuance of Section 15 of Marketing of Petroleum Products (Federal Control) Act 1974 and Section 8 of the Esso Undertakings (Vesting) Act 1976.

Under the plan, State Oil Company Limited--a private company wholly owned by the federal government in which ESSO undertakings were vested on 15th September 1976--took over the entire undertakings of Pakistan National Oils Limited and Premier Oil Company Limited as disclosed in their respective balance sheets as at 30th June with all assets, liabilities etc. at the date of transfer.

The company was later converted into a public company and its name changed to Pakistan State Oil Company Limited.

The amalgamation scheme did not involve any acquisition of shares from private shareholders of Pakistan National Oils Limited and former Premier Oil Company Limited. PSO, with annual turnover of Rs. 270 crores, thus, became the largest oil marketing company of Pakistan.

In consideration for the said transfer, the reorganization plan provided that all shareholders of the two former companies, PNOL and POCL, be issued fully paid-up ordinary shares of PSO against their holdings in PNOL and POCL along with fully paid-up premium shares. This was done at the rate of 1,185 PSO shares for every 1,000 shares of PNOL and 1,136 PSO shares for every 1,000 shares of POCL.

The formative period of any company is always comparatively difficult but for an organization emerging out of the merger of three separate units, the problems can be more complex, PSO, during its first year of operation, was no exception. However, most of the problem were satisfactorily resolved and the company emerged a homogenous commercial organization.

PSO sold a total of 2,514,000 tonnes of petroleum products during the year ending June 30th 1977. This accounted for a turnover of Rs. 404.53 crores, showing tax before profit of Rs. 2.68 crores. Such meager return was partially due to the unrealistic gross margins, which were available to the oil marketing companies in all main products and were fixed by the government as far back as 1963.

At the end of the first year, the extent of the PSO operations was that it had four ocean terminals, 34 inland depots, four blending plants and 950 retail outlets. Of the retail outlets, 715 were gasoline and HSD stations, 126 service stations, 44 LDO farm stations and.65 kerosene stations.

In its first year of operations, the upcountry storage capacity of the company was augmented by 33,000 tonnes. The storage capacity was established at Gilgit, Chitral and Skardu, enabling the residents of the Northern Areas to obtain their requirements of petroleum products throughout the year and at reasonable prices. …

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