The oil giant called Pakistan State Oil started its journey in the year 1976 when three corporate entities - Esso, National Oils Limited (PNOL) and Premier Oil Company Limited (POCL) - were merged together by the Government of Pakistan to create an industry leader that would leave its imprints from Karachi to Khyber, from Gwadar to Sust, high in the majestic Karakorams near the Chinese border.
PSO came into being on December 29, 1976. The 30-year passage, however, has not been easy. The merger of any two corporate entities brings in its wake a host of problems. One can imagine what a union of three would unleash: duplication of resources, overlapping costs, control ambiguities, clash of cultures, organisational issues, etc.
It is to the credit of late Mr M A Alvi, PSO's first managing director, and employees of that time that the issues were resolved, the working streamlined, new objectives set and the company embarked on a new direction. 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.
PSO sold a total of 2,514,000 tons of petroleum products during the year ending June 30, 1977. By the second year of operations ie 1977, the company had successfully overcome the initial problems of the merger, establishing itself as a homogeneous commercial force capable of playing its rightful role in the economic progress of the country.
Today, Pakistan State Oil Company Limited (PSO) has been over the years the largest oil marketing company in Pakistan with an FY 2006 turnover of US $5.8 billion. The company enjoyed over 77 percent share in Black Oil and 57 percent White Oil market on June 30, 2006.
PSO is a blue chip organisation with market capitalisation of around Rs 53 billion (US $0.9 billion), contributing US $975 million to the national exchequer in financial year 2006. Its earnings over the last five years have more than doubled from Rs 3.2 billion to Rs 7.5 billion, maximising shareholder value.
With retail coverage of over 3,700 outlets representing 66% participation in total industry network, PSO is engaged in import, storage, distribution and marketing of various POL products, including Motor Gasoline, HSD, Fuel Oil, Jet Fuel, Kerosene, LPG, CNG and petrochemicals. The company supplies around 4.9 million tons of retail fuels ie. Motor Gasoline and Diesel and serves 2.8 million customers on daily basis.
Supported by well-established infrastructure built at par with international standards, comprising around 860,000 MT storage facilities (representing almost 81% of total storage in the country), PSO retains an edge over its competitors in terms of economies of scale and cost-effective operations.
The company's LPG business unit delivers cheap and environment-friendly fuel to low-income households and rural areas. The Agency Trade unit delivers Kerosene, Light Diesel Oil and lubricants to end-users via 500 distributors appointed all over Pakistan.
Along side its retail business, PSO also caters to the fuel demand of industrial consumers that include power generation, railways, sugar, textile, steel mills, etc. The company has also been meeting the fuel needs for the defence of the nation and maintains prompt supplies to armed forces throughout the length and the breadth of the country.
TURNAROUND:
Six years ago, the PSO management embarked on a turnaround drive which included corporate plan, strategic plan, business-line plan, investment plan, business-wise and product-wise profitability analysis, corporate performance monitoring system and prudent capital budget.
Today, Pakistan State Oil has managed to develop a sound strategic framework, which operates in line with the best international practices. The management's thrust has been on increased operating efficiency, more consideration on high margin products, further expansion of new product lines and services and tightening of systems. Besides innovative marketing strategies, there has been organisational restructuring, product mix and the revamping of internal systems that have all led to improved productivity.
PSO's corporate structure has evolved into a matrix, which has divided the company's major operations into independent activities supported by the financial, legal, information and other services. These activities operate in an autonomous and collegial manner in the form of Strategic Business Units based on the clear and transparent allocation of responsibility and accountability.
This structural change has been reinforced and related checks and balances have been established by putting in place several corporate monitoring and control systems.
In addition to this, various new products and services like CNG stations, PSO CNG Oil, Mobile Quick Oil Change and Mobile Quality Testing Units have improved the image of the company significantly.
Effective implementation of corporate reform and business development strategies in line with the best international practices enabled PSO to maintain its market leadership position in a highly competitive business environment.
At the core of this endeavour is the New Vision Retail Development program that brought about the development of elegantly designed outlets at strategic locations throughout the country. Equipped with most modern facilities like electronic dispensing units, convenience stores, Business Centers and, most of all, a more customer friendly staff, these outlets have gone a long way in restoring the customer confidence in PSO.
At present, New Vision network has been expanded to over 1,500 outlets.
PSO successfully expanded its company-owned fleet to major cities under the fleet management plan. The company acquired 12% equity investment in Pak Arab Pipeline Company (PAPCO) and worked 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 past several years, has also augmented its storage facilities through 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 Development Authority (WAPDA).
In order to improve the brand equity and to restore customer confidence, the Company-Owned & Company-Operated (CoCo) sites network has been expanded to 40 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's ERP initiative, SAP, the largest in the region, became fully operational on July 1, 2005 with all systems streamlined on real-time basis. Information is now available expeditiously to help business decision-making.
INNOVATIVE PRODUCTS:
PSO has taken lots of initiatives by introducing innovative and technology-driven products and services for its customers - efforts that remain unmatched. With ever-increasing stiff competition, PSO had to take the lead from its competitors not only through its superior fuel products but also by innovative technological advancements, which would not only provide its customers convenience but would also introduce them to whole new world of automation through secure transactions.
In July 2002, a novel concept was introduced in the country by PSO to reward its customers for their loyalty and patronage towards the company through the 'PSO Loyalty Card'. These cards paved the way for other plastic cards that were to follow.
After the successful launch of PSO Loyalty Cards in February 2003, PSO launched its fuel-based credit cards for the business entities.
Then followed the PSO Prepaid Cards in September 2003 with multiple denominations to match the consumption patterns of the individual consumer.
PSO has introduced the most revolutionary diesel fuel in Pakistan. Called Green XL Plus Diesel, it is available at all PSO petrol pumps throughout the country at no extra cost. Green XL Plus Diesel contains a proprietary multifunctional additive package, giving the consumer improved performance through better combustion of diesel fuel. As reduction in black smoke, soot and particulates leads to cleaner environment, Green XL Plus Diesel will have major benefit across the country, particularly in high population density cities such as Karachi, Lahore, Multan, Rawalpindi and Faisalabad.
PSO has also introduced a new revolutionary gasoline at no additional cost to the customer. Called Premier XL, the pre-additized gasoline is available across the network of stations and motorists throughout the country can now notice the "clean" driving difference this gasoline makes. XL enhances fuel economy, which leads to better engine clean up and corrosion control of fuel tanks and piping and reduces exhaust emissions. Also, constant use of Premium XL provides quicker acceleration and better drivability with reduced engine maintenance cost. The new PSO product is equally good for both new and old cars.
PSO has launched 'E10 Gasoline pilot project' in Islamabad, Karachi and Lahore. The new fuel - ten percent ethanol blended with motor gasoline - is being introduced experimentally as part of the government's strategy to promote alternate energy resources. During 2005, the country had to pay 2.5 billion dollars extra due to unprecedented spike in world oil prices.
Ethanol, a by-product of molasses through distillation, would not only be comparatively cheaper but will also enhance performance of the engine through lead removal. It would also benefit farmers, who would feel attracted to grow more sugarcane and get adequate compensation.
The pilot project will be conducted for six months, with 25 pre-identified vehicles using Ethanol-blended Gasoline in each city being monitored by the Hydrocarbon Development Institute and PSO to evaluate their performance, customer response and feedback. Based on these results, the blended fuel usage in the country will be initiated, presenting customers with alternate fuel choices as in CNG and LPG.
PSO and Sui Southern Gas Company (SSGC) have entered into a customer facilitation alliance by inking an agreement to provide consumers with the facility to accept SSGC bills at PSO stations. The agreement is unique of its kind since it makes PSO the first non-banking entity where consumers can pay their SSGC utility bills. This agreement allows consumers with a facility to pay cash on 24/7 basis in a totally secure, hassle-free environment of PSO outlets, thus, saving them from the inconvenience of queuing up at banks. The transaction will be done electronically via POS Terminals powered by ORIX network. Currently, over 100 PSO petrol stations have been provided with this facility in Karachi and later 200 more stations will be covered in Sindh and Balochistan.
PSO introduced the Electronic Voucher (EVD) facility at its forecourts across the country in January 2006 along with Mobilink. Electronic Vouchers of all major Jazz denominations provides the option of topping up their mobile phone balance while refuelling their vehicle.
To meet the ever-growing CNG demand, in addition to persistently increasing CNG facilities at PSO outlets, the company pioneered an innovative concept of Mother-Daughter CNG facilities at retail outlets on highways where piped gas is not available.
RECORD PROFITS:
During the period July 1, 2005-June 30, 2006, the company's sales revenue reached Rs 353 billion compared to Rs 254 billion in the previous year. As a result, PSO recorded profit before tax of Rs 11.7 billion, up by 27% over last year, and profit after tax of Rs 7.5 billion, up by 33% over the same period.
Despite the increasingly stiff competitive market situation, PSO again emerged as leader with 65% share on overall basis.
THE FUTURE:
Today, PSO has become a role model of corporate transformation for other entities operating in Pakistani business environment. In the era of deregulation, PSO is now responding faster to the changing market conditions. This has been made possible by overhauling strategies and harnessing strengths to stay ahead of the competition. With a demonstrable track record of leadership in the oil-marketing sector, PSO will continue to break new grounds in order to reach its true potential.
-- 01-01-74 The Federal Government took over the management of PNO (Pakistan National Oil) and DPL (Dawood Petroleum Ltd), renamed into POCL (Premier Oil Company Ltd), under marketing of Petroleum Product Federal Control) Act 1974.
-- 03-06-1974 The Government incorporated "Petroleum Storage Development Corporation (PSDC)".
-- 23-08-1976 Name of PSDC changed to State Oil Company Limited (SOCL).
-- 15-09-1976 The Government purchased ESSO Undertaking, vesting the same in SOCL.
-- 30-12-1976 The Government merged PNO and POCL into SOCL and named it as Pakistan State Oil Company Limited (PSO).