Pakistan State Oil Company Ltd (PSO) is the largest oil marketing company in the country having an average turnover of around US $3.6 billion. With an overall market share of 67% -- around 79% in Black Oils and 60% in White Oil -- PSO ranks among the top corporate entities with highest earnings and capitalisation.
The cross-country infrastructure, comparable internationally, represents 82% of Pakistan's total storage facility, providing PSO a clear advantage over competition.
PSO came into being back in 1976 with the amalgamation of three Oil Marketing Companies -- Esso Eastern, Pakistan National Oil (PNO) and Dawood Petroleum -- as part of the Government of Pakistan reorganisation plan. It has turned out to be one of the most successful corporate mergers in the history of this South Asian nation.
With retail coverage of over 3,800 outlets, representing 80% participation in total industry network, the company supplies around 4.5 million tons of motor gasoline and diesel.
Along side its retail business, PSO also caters to the fuel demand of industrial consumers that include power generation units, railways, sugar, textile, steel mills, etc.
The company has also been meeting the fuel needs of defenders of the nation and maintains prompt supplies to armed forces round-the-clock.
PSO operates at 8 airports and serves 4 domestic and 18 international carriers under its technical /commercial license agreement with Air Total International. It enjoys over 65% market participation in aviation fuel.
The company's LPG business unit, supported by 4 plants with a combined capacity of 750 MT/day, is delivering cheap and environment friendly fuel to low-income households and rural areas where natural gas is not available.
Its Agency Trade unit is fully alive to its responsibilities of delivering kerosene, light diesel oil and lubricants to end-users via 500 distributors all over Pakistan.
CORPORATE REVIVAL PROGRAM: During the last three years, PSO has undergone radical changes, both internal and external, and has emerged with a new outlook and a long-term vision.
The company is the only public sector entity in Pakistan that has been competing effectively with three multinationals companies, which are supported technically by their parent organisations.
Owing to its radical turnaround, the company has been a popular topic of case studies in Pakistan and abroad, and was in 2003 invited to become a member of the prestigious World Economic Forum.
In line with the government's good corporate governance policy, the Ministry of Petroleum & Natural Resources undertook a bold initiative in oil and gas sector and a restructured Board of Management of PSO was inducted in February 2000, comprising professionals of great repute.
This wind of change made it possible to undertake strategic initiatives in all spheres of operations.
Radical transformation of corporate architecture and business practices has enabled PSO to offer dynamic and innovative response to actual and potential challenges in all facets of activity, including product range, prices and service levels.
The management strongly believes in contemporary management concepts and best practices as they can result in performance improvement.
In addition, they also help PSO to anticipate changing business environment and gear it up to cope with adverse scenarios; capitalise on its core competencies; and require the company to play more proactive roles rather than following a reactive approach.
In pursuit of its vision 'to excel in delivering value to customers as an innovative and dynamic energy company that gets to the future first', the company aims at getting recognised as an energy company through diversification and integration; retaining market leadership in all key products; maximise shareholders' wealth by sustainable growth in earnings; establishing PSO as a brand of choice for customers, and utilising all available resources optimally.
STRATEGIC INITIATIVES & REFORMS: PSO believes in optimal use of resources to achieve distant vision through planned corporate objectives by implementing effective strategic management, which simply requires a combination of revolutionary and evolutionary practices.
Maintaining market leadership position and achieving a tangible and perceivable business advantage in a highly competitive, turbulent and uncertain business environment is the major challenge faced by PSO.
With the objective of providing an effective and timely strategic response to the actual and potential business challenges, PSO has successfully developed and implemented a comprehensive and far-reaching corporate revival program, which has resulted in remarkable accomplishments that have been widely acknowledged and appreciated at various national and international fora.
Radical transformation of corporate architecture and business practices enabled PSO to offer dynamic and innovative response to actual and potential challenges in all aspects of business, including product range, prices and service levels. PSO succeeded in enhancing professionalism in its staff and cultivating customer loyalty through effective and continual communication, reliable service and superior product support.
PSO has been operating in an industry that had been growing steadily primarily in retail area.
In order to retain its brand leadership, PSO management came up with aggressive marketing strategy of development to tap unexplored market. PSO expanded its New Vision Network to 850 within 4.5 years with an average construction pace of 1.9 days/outlet.
Owing to customer-focused approach, the company has been able to converts its New Image retail outlets into 'Islands of Excellence' with superior customer service thus beautifying the landscape of the country.
The company introduced 'business partner' concept for its dealers, distributors and cartage contractors. Regular dealers, suppliers and cartage contractors' conferences are held to ensure two-way smooth flow of information with all stakeholders.
In order to capture 100% business of JetA-1 at New terminal Complex Lahore, The company successfully commissioned Into-Plane and fuel Farm facility with the state-of-the-art equipment.
With the reconstruction of Afghanistan, the company proactively captured major fuel businesses and exported major chunk of Jet A-1 Gas Oil, Mogas and lubricants.
Keeping in view the impending competitive scenario, PSO has adopted Vertical Integration strategy (both forward and backward) to enter into profitable ventures with assured income streams.
By virtue of this strategy, the company would be mitigating business risk arising from the probable substitution of fuel oil into gas thus ensuring adequate returns to all stakeholders.
The company is currently working on setting up a refinery with 8 million tons capacity at an estimated cost of USD 1.5 billion.
Initial technical and financial due diligence studies are under way. With the successful implementation of this refinery project, Pakistan would meet its gas oil and fuel oil requirements, which are currently being met through imports.
PSO successfully expanded its company-owned fleet to major cities under the fleet management plan.
The company acquired 12% equity investment in PAPCO (New White Oil Pipeline Co) from Karachi to Multan and is working closely with Attock Refinery on a joint venture white oil pipeline project to complete the missing link of cross-country pipeline network of around 450 km starting from Machike (Lahore) to Tarujabba (Peshawar).
The company, during the last three years, has also augmented its storage facilities by adding 60,000 MTs additional tankage at Zulfiqarabad Oil Terminal, Karachi for Bosicor Refinery.
The company also started Terminaling Business and entered into hospitality arrangements with Pak-Arab Refinery (PARCO), Attock Refinery and the Water & Power Authority (WAPDA).
PSO management strongly believes that all efforts should be directed towards customer delight.
In order to improve the brand equity and to restore customer confidence, Company-Owned & Company-Operated (CoCo) sites network expanded to 30, while 24-Hour Customer Care department has already been established with Toll Free number.
Aggressive advertising and sales promotion campaigns backed by strong media support have helped the company to increase its brand equity.
The company has been striving to launch innovative products and services and is now recognised as the leader with Innovativeness.
The launch of plastic card technology by PSO has offered customers a wide array of convenience in terms of loyalty points, secured transactions free of hash handling and lucrative discounts.
In order to reinforce the brand image and to further create brand awareness among customers, PSO has been making considerable efforts by using permanent tools like billboards and hoardings at strategic locations.
NEW VISION BONANZA: With the successful implementation of well-perceived and calculated strategies during the last three years, PSO has emerged with new outlook in terms of its image, sales and financial performance.
Indeed, it is now the market leader with a vision that has been translated into long-term strategic plans.
The corporate turnaround has been widely acknowledged and appreciated by local as well as international firms, academia and prestigious institutions.
During the fiscal year 2002-03, PSO posted profit after tax of over Rs 4 billion or US $70 million (an increase of 26% over prior year when it had displayed 74% growth in profit at Rs 2.3 billion (US $40 million).
Despite its struggling fuel oil business owing to availability of natural gas to power generation utilities in line with the government directives.
PSO, being the sole supplier of power generation plants, has been absorbing the impact of fuel oil volumetric drop by focusing more on high margin products.
During the first-half of the fiscal year 2004 (July-December 2003), PSO posted profit before tax of Rs 3.25 billion (US $57 million) while the profit after tax stood at Rs 2.12 (US $37million), up by 3% over prior year period.
PSO's stock has continuously been moving up during the last two-and-a-half years, which shows investors' confidence in this blue chip which leads the local stock exchanges.
Today, PSO has become a role model of corporate transformation for other entities operating in Pakistani business environment. It also provides an incentive for the local as well as global investors to come to this land of opportunities and possibilities,
(Managing Director Pakistan State Oil)
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