PSO's MD highlights the business environment challenges

Pakistan State Oil despite difficult conditions in the country maintained a turnover of Rs 222 billion  in the first quarter maintaining the overall market share of 71.3% with a market share of 60.2% and 85.2% in white and black oil respectively, Mr. Kalim Siddiqui, Managing Director, Pakistan State Oil told correspondents at a briefing on October 28, 2008.

Presenting to the media the highlights of the business environment, Mr. Siddiqui, stressed that the extraordinary external factors including foreign exchange and inventory losses led all players of the Oil Sector including the refineries to report losses in the first quarter of FY-09. He highlighted that the average OPEC crude oil price for the FY-08 was $114/bbl while the spot on price as of October 23, 2008 is reported to be $60.27/ bbl. To further explain the impact of external factors, he presented PSO’s Profit & Loss statement without foreign exchange and inventory losses which stated a profit after tax of Rs. 3.53 billion.

He further highlighted the key issues facing the largest oil marketing company importing approximately 80% of fuel oil, which includes the circular debt of Rs. 77 billion which has led PSO to delay the payment to refineries. The company currently owes Rs. 71bn to the refineries. He further explained that the circular debt primarily was caused due to non payment of HUBCO, WAPDA, KAPCO, PIA and the PDC accumulated with the Government. The circular debt has compelled the company to take financial assistance at high interest rates from the banks resulting in payment of Rs. 1 Billion as financial cost on borrowing, he added.  Mr. Siddiqui mentioned that the Government is aware of the liquidity crunch faced by PSO and is taking measures to facilitate the company. He apprised the media that the Government has ensured the payment of PDC at the rate of Rs. 600 million/ day to pay off the current accumulation of Rs. 12 billion in the next few days. 

While addressing the media, he underscored the importance of immediate resolution of circular debt to effectively plan the future imports of POL products and continue the supply of fuel to the country. He thanked the media for their support in this difficult time.