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PSO market share rises in Sept 2019, looks forward to keep up top position

According to the International Energy Agency (IEA) the worldwide oil demand will hit a plateau around 2030 as the use of further efficient cars and electric vehicles ends an expansion that dominated the past century. While the present growth rate of 1 MMbpd or about 1 percent will hold for the next 5-year, it will ebb to just 100,000 bpd in the 2030s. By that time, the use of oil-based fuels in passenger cars will have peaked, the IEA said in its long-term World Energy Outlook.

It is also reported the necessity to find new supplies should cause prices to increase from present levels of about $60/bbl to reach $90 in 2030 and $103/bbl in 2040. The worldwide oil demand averaged 96.9 MMbpd previous year and will climb to 105.4 MMbpd in 2030. After that, the growth rate of 100,000 bpd is about half the level the agency predicted in last year’s report, and is concentrated mostly in the aviation, shipping and plastics sectors. IEA predicted that demand will reach 106.4 MMbpd in 2040. The use of more fuel-efficient car engines will knock out 9 MMbpd of demand, while the growth of electric cars will displace about 4 million a day. Yet despite the flattening of oil demand, worldwide emissions of carbon dioxide from energy will keep rising after 2040 as developing nations continue to burn coal for power generation.

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The experts showed that no doubt, Pakistan’s economy continues to face economic problems as experienced during FY2019. Reduced fiscal space because of IMF program and substantially high discount rates are impacting the overall industrial sector and consumer’s spending. This can be witnessed through reduction in demand of automobiles by 22 percent over the corresponding period previous year and considerable pressure on Large Scale Manufacturing (LSM) sector. It is also said that these economic indicators continued to impact the domestic petroleum industry and led to reduction in overall market size which was exhibited through fall of 6.9 percent in White Oil volumes, 21.2 percent in Black Oil and 9.8 percent in overall Liquid Fuels.

In the developing countries like Pakistan where the Pakistan State Oil (PSO), is the largest energy company and is presently engaged in the marketing and distribution of various POL products counting Motor Gasoline (Mogas), High Speed Diesel (HSD), Furnace Oil (FO), Jet Fuel (JP-1), Kerosene, CNG, LPG, Petrochemicals and Lubricants. According to the company’s statistics, PSO possesses the largest distribution network in Pakistan comprising of 3,754 outlets out of which 3,565 outlets serve the retail sector and 189 outlets serve their bulk customers. Out of the total of 3,754 outlets, 1,786 Retail and 167 Consumer Business outlets have been upgraded with the most up-to-date facilities as per the visualization of the New Vision Retail Program.

Statistics also showed that PSO also operates 26 company-owned and company-operated (Co-Co) sites serving the retail sector. Furthermore, retail customers greater than 2,000 industrial units, business houses, power plants and airlines are being fueled by the company.

 

Despite tough competition and macroeconomic problems, Pakistan State Oil is making all out attempts to enhance its market share and leadership position with sustained profitability. The management of the company continued to lead the downstream oil market with an increased overall market share of 46.6 percent compared to 40.1 percent in the same period last year in Liquid Fuel.

According to quarter ended September 30, 2019, PSO’s market share enhanced mainly because of volume growth of 5.8 percent in White Oil. Consequently, the market share of White Oil grew to 45.0 percent as against to 39.6 percent in the same period previous year. The rise in market share was attained through focused approach of management to incentivize its customers and dedicated team attempts.

The Company also managed to bring more efficiency in its supply chain by sourcing 42 percent of Refinery production during the period as against to 33.6 percent in the corresponding period previous year while 54 percent of industry imports were handled by PSO.

The present report of the Company also showed that during the period, PSO maintained its focus towards enhancing customer’s experiences. PSO’s ‘DigiCash Card’ initiative received an overwhelming response from customers and PSO was able to register greater than 50,000 customers as a result of this initiative. The Company is working with Saudi Aramco for setting-up a Greenfield deep conversion Refinery in Pakistan. Further, PSO’s subsidiary, Pakistan Refinery Limited continues to progress its refinery upgrade project. It is also mentioned in the report that PSO has recorded Profit after Tax (PAT) of Rs. 3.53 billion as against to Rs. 4.18 billion in the same period previous. Main reasons for reduction in PAT is significant rise in financing cost on account of higher discount rates set through the State Bank of Pakistan (SBP), partially offset by exchange gain because of appreciation of Pakistani Rupee. On a consolidated basis, the group attained a net turnover of Rs. 340.64 billion which translated into a Group PAT of Rs. 3.48 billion.

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During the quarter ended September 30, 2019, the company’s receivables from power sector declined by Rs. 8.9 billion whereas receivables from Sui Northern Gas Pipelines Limited rose by Rs. 2.4 billion. PSO is continuously engaged with concerned authorities for recovery as these receivables, in a higher borrowing cost scenario, will have pessimistic impact on PSO’s bottom line.

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