Shams ul Nisa

Pakistan State Oil (PSO), the leading oil and gas marketing company – has made significant strides in strengthening its nationwide network and addressing the circular debt crisis, reports WealthPK.

The company has expanded its retail footprint across Pakistan to 3,603 outlets and upgraded 68 non-fuel retail outlets into modern convenience stores, known as C-stores. This expansion reflects PSO's commitment to enhancing accessibility and convenience for the consumers. PSO's profitability is impacted by the circular debt crisis, which stands at Rs468 billion as of September 2024. Hence, several recovery strategies have been initiated, including successfully recovering Rs7.1 billion in overdue payments during the first quarter of FY25 and actively working on settling receivables from Hub Power Company Limited (Hubco), amounting to Rs14.8 billion.

Established in 1976 as a public company, Pakistan State Oil Company Limited primarily handles petroleum procurement, storage, and marketing, as well as blending and marketing various types of lubricating oils. The company's digital transformation has also been a key focus, with the integration of 150 additional retail outlets into its digital framework, bringing the total to 1,150. This initiative will enhance security, operational flexibility, and customer convenience. Additionally, by leveraging technology, PSO is streamlining operations and creating a more engaging experience for its customers.

The recovery of circular debt is critical for PSO's financial health and the broader energy sector in Pakistan, as the accumulation of unpaid dues has created significant liquidity issues for many companies, leading to disruptions in supply and service delivery. Therefore, by tackling these debts, PSO aims to stabilize its operations and ensure uninterrupted fuel supply across the nation. PSO reported a net profit of Rs3.97 billion for the first quarter ending September 30, 2024, despite facing challenges such as reduced sales volumes and circular debt.

The company's performance was influenced by external market conditions, including a significant drop in the global crude oil prices from $85.5 per barrel in July to $74.3 in September 2024. However, the company experienced a positive trend with a 21.4% recovery in white oil sales in September due to enhanced border security measures. Furthermore, PSO remains committed to sustainability and corporate social responsibility (CSR). During Q1FY25, CSR Trust contributed Rs70.5 million to various charitable organizations focused on healthcare, education, and youth development.

Additionally, PSO has signed a long-term LPG Supply Agreement with United Energy Pakistan Ltd., resulting in a 25% increase in its LPG allocation. As PSO strengthens its nationwide network and tackles circular debt recovery, it is focusing on enhancing financial performance and operational efficiency. Key initiatives include digitization and process re-engineering, while investing in capacity expansion projects to generate substantial shareholder value.

The management acknowledges the ongoing support from stakeholders and emphasizes collaboration with government entities like the Ministry of Energy to navigate these challenges effectively. PSO's efforts to strengthen its nationwide network and address circular debt recovery are vital for ensuring uninterrupted fuel supply across Pakistan. By focusing on operational excellence and financial stability, the company aims to contribute significantly to economic growth and energy security.

Credit: INP-WealthPk