PSO to test privatisation-driven economic managers’ nerves | Pakistan Today

PSO to test privatisation-driven economic managers’ nerves

State-owned oil giant eyes above 62pc market share in 1HFY14; registers 81pc volumetric growth in 1QFY14; slashes Rs 17bn Feb-June LoC bank defaults to zero; enables oil marketing sector outperform KSE100 index

The Public Sector Enterprises (PSEs) whereas are doing little or nothing to assure the resource-constrained federal government of their financial viability, the highly profitable public sector entities like Pakistan State Oil (PSO) is out to test the nerves of the country’s privatization-driven economic mangers.

The PML-N-led central government whereas has pinpointed certain PSEs, particularly those incurring huge losses to the national kitty, for being wholly or partly sold off, some market observers are asking for a rationale behind the proposed privatization of state-owned organisations that are profitable.

On the other hand, the PSO seems bent upon creating every reason to make the economic mangers revisit their plans for putting to sale stakes of the well-performing state-owned oil giant.

Having registered the highest ever after-tax earnings of Rs 7.8 billion during 1QFY14, the PSO is eyeing a record turnover with its overall market share expected to swell beyond 62 percent during the first half of current fiscal year (1HFY14). The quarterly earning depicts a whooping growth of 81 percent when compared with Rs 4.3 billion the company had earned during corresponding quarter of FY13.

According to the Oil Companies Advisory Committee (OCAC) data, the PSO maintained its “market leadership” with an overall market share of 63.8 percent during 1QFY14. Its share in black oil and white oil stood, respectively, at 75.9 percent and 52.5 percent.

The committee data for the first five months of FY14 shows that the PSO’s turnover during July-November (2013) rose by 18 percent accumulating approximately to Rs 621 billion compared to Rs 525 billion of the same period last year.

The company also appeared to be one of the few well-performing oil marketing companies listed on the country’s stocks market.

Revealing their investment strategy for 2014, the analysts at Topline Research viewed that the equity investors with proper re-balancing could generate above-average return from local stocks. The PSO was cited by the analysts as one of their “top picks” for equity investment during 2014.

With the country’s largest listed oil and gas sector having posted a return of 47 percent in just-concluded 2013, the PSO happens to be one of the 12 listed firms that outperformed the benchmark KSE100-share index by 24 percent in 2013YTD.

The company, Topline analyst Vahaj Ahmed viewed, was the sole contributable factor for the oil marketing sector outperforming the index.

In contrast to E&Ps, the analyst said, the oil marketing sector posted a return of 52 percent, thanks to 74 percent return provided by the PSO, said. “PSO benefited most from the circular debt resolution resulting in improved operational leverage and cash flow,” he said.

The company’s share in the benchmark index increased from 2.4 percent to 2.9 percent in 2013.

When contacted, PSO officials said their “dynamic” management was doing much more than what was required to survive in the highly competitive market.

They said the PSO management had been making vigorous efforts during the past five months to increase the company’s market share significantly on month-on-month basis.

This, the officials viewed, was reflected by the fact that during July-November, the company’s share in the HSD market upped from 50 percent to 57 percent and MOGAS improved from 48 percent to 50 percent. Besides, in the lubricants market PSO’s share rose from 16 percent to 28 percent amongst other OMCs within a short span of three months.

“The company has further started to rationalize and balance its product portfolio and focus on high margin products for greater revenue generation,” said the officials, wanting not to be named.

During the period under review, they said, the company recovered interest income of Rs 8.2 billion from HUBCO and KAPCO. However, they said, the current recovery against the supplies made during July-November stood at Rs 484 billion. Also received the company, they said, Rs 69 billion against old receivables as of June 30.

Further, the officials said the review period saw “prudent fund management” having helped the company avoid a single bank default on account of non-payments of Letters of Credit (LCs).

“This is especially significant as during the preceding five months (February–June 2013) there were four defaults amounting to Rs 17 billion on different dates,” they recalled.

Further, the officials said, banking on its countrywide 3,500 plus retail sites, the oil marketing giant was able to fulfil the furnace oil demand of the energy-scarce country’s public and private sector electricity generating companies.

It also catered high demand of motor gasoline in the country due to low availability of CNG and was shown to have imported 30 percent more gasoline during the past five months as compared to the same period last year, they added.

One Comment;

  1. BrotherNo1 said:

    PMLN family is sucking the blood of common man; their assets must be confiscated to save the country

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