Pakistan's import bill for petroleum products is
bound to touch the highest level of $6 billion this year; the country
has so far spent on oil purchases since its inception. However, the
rising cost of oil import is beyond control of any government on the
back of unprecedented and unabated demand for fuel around the world,
especially in China which has launched developmental projects at a
It is, however, a funny situation that while the
unrealistic increase in oil prices has become a major concern for the
developing economies, the oil marketing companies are enjoying
windfall profits out of the booming oil business.
Recently, Shell Pakistan declared its financial
results posting a profit after tax at Rs2.45 billion as compared to
Rs1.50 billion of the previous year portraying almost double profits
for the year ended June 2005.
Farooq Rahmatullah, Country Chairman of Shell
Pakistan, while announcing the financial results said: "Over the
last decade, Shell Pakistan Limited has developed a robust program of
social investment. Significant highlights of this year include the
inauguration of the first Shell-Marie Stopes clinic in Multan for the
provision of free reproductive health services, and free eye camps
with Layton Rahmatullah Benevolent Trust (LRBT) camps at installations
in Mehmoodkot near Multan and Machike.
When PAGE invited his attention towards the hefty
profits of the oil marketing companies with the claim of being a
responsible corporate entity, then why they cannot sacrifice some of
the profits to bring down the oil prices, which have widespread impact
on general prices.
Farooq said that oil companies are allowed a 3.5
percent margin, which is still lower than the size of margin allowed
by various countries in this region. He also said that after the
overheads and after passing on the profit to the shareholders, the
real earnings reduce to just 10 paisa a liter.
When his attention was drawn towards allegations of
maneuvering in petroleum pricing by OCAC after every fortnight and if
there is no manipulation why the oil companies were protecting the
Farooq said: "OCAC is just acting as the front
man of the government and it has nothing to do with oil prices except
to announce them. It is the government that determines the
prices". He, however, was full of appreciation for the government
which according to him doing its best by absorbing additional cost of
oil just to give relief to the consumers.
Shell Pakistan delivered strong results for the
full year ended June 2005 by achieving a profit after tax of Rs2.451
billion as compared to Rs1.508 million, showing a growth of 63 percent
over the same period of last year.
The improvement in profits, as attributed by the
management, was due to a better product mix and increasing
international oil prices.
A final dividend of Rs 27 per share was recommended
by the board of directors which together with the interim dividend of
Rs8 per share declared in January last will bring the total dividend
for the financial year 2004-05 to Rs35 per share. Additionally, the
board has recommended the issuance of bonus shares in the proportion
of one share for every four shares held i.e. 25 percent.
Despite the healthy increase in profits, the year
saw an unfavorable cash flow of Rs2 billion caused mainly by increased
product costs that were not fully recovered as a consequence of the
government's decision to freeze prices and initial line-fill for the
White Oil Pipeline Project in which Shell is a 26 percent share
Price differential claim recoverable from the
government at present amounts to around Rs1.4 billion. Currently, the
company is financing the subsidy to customers on diesel of
approximately Rs5 per liter.
In terms of business operations, Shell has this
year increased its retail site network strength to bring more
convenient locations to customers. The retail visual identity network
grew from 760 sites to 826 sites, and CNG network also grew from 77
sites last year to 96 sites at present.
Shell continues to focus on value-added products
that deliver better performance and value to the shareholders by
moving away from volume-oriented to a profit-oriented business model.
This is demonstrated by Shell's achievement of the
highest throughput per site amongst major competitors.
Farooq Rehmatullah claimed that Shell brand is the
most preferred brand amongst motorists across Pakistan. "We are
constantly improving relationship with dealers through initiatives
such as the Royal Dealers Club, which recognizes and extends
performance awards to dealers .
In lubricants business, the year has seen some
significant achievements, at the top of which is the partnership
agreement between Pak Suzuki and Shell Pakistan, in which Pak Suzuki
has recommended Shell Helix as the preferred engine oil for all of its
cars being sold in Pakistan.
While Shell's aviation business has continued its
strong performance with an increased market share in the past
financial year and has once against contributed significantly to the
Shell Pakistan has been instrumental in raising
industry awareness on safe shipping operation through various forums
and has recently carried out a vetting exercise of three PNSC vessels
by Shell International Trading & Shipping Company (STASCO). This
move has successfully facilitated the government's decision on
enhancing local shipping standards to an international level.
The company follows strict criteria of merit in
selection and growth of its staff. At present Shell Pakistan has 50
employees working on international assignments at places stretching as
far as U.K. to Far East.