PSO barely surviving backlog of Rs304b

LAHORE: The outstanding receivables position of Pakistan State Oil (PSO) remains at a historic high at Rs304 billion despite receiving Rs50 billion in three tranches.
Sources informed Pakistan Today that PSO is facing serious cash flow issues as any one-off bulk payment to clear the outstanding receivables is not on the horizon. They also said that PSO has been witnessing a declining share in the market..0
They expected a steep decline in the sale of Furnace Oil at 45 per cent in the fiscal year 2019 and a reduction in the pace of receivables buildup owing to a shift in the power mix from FO to coal/RLNG in near-term, however, clearance of the backlog was expected to take time.
The recent release of funds by the government to reduce the piling circular debt provided little relief to the company, however, they believe the company remains behind the curve in its efforts to maintain its market share amid growing competition and expected market share.
Sources informed that fuel sales during May-2018 posted an increase of 31 per cent at 2,449 thousand tonnes. However, sales recorded were 1 per cent lower on a yearly basis where most of sequential improvement came on the back of 132 per cent improvement in FO sales on monthly basis that was 857 thousand tonnes sold during the month post government’s decision to continue with oil-based generation for the time being. But PSO stayed off 12 per cent in energy fuel sales that stayed at 11,415 thousand tonnes instead of 12,971 thousand tonnes at the eleventh month of the fiscal year 2017.
Talking about the shrinking market share, they said aggressive approach required to arrest the decline: PSO has been witnessing a drop in market share in key segments of MS and HSD since fiscal year 2014.
Key reasons for the continuous drop include negative growth in retail outlets, particularly in urban centers due to lower profitability, (ii) increasing competition where three new players entered the Punjab market during the fiscal year 2017, and (iii) focus of existing industry peers on fast pace retail and storage expansion while PSO lags behind.
The recent development of lifting the ban on CNG-kit imports is also expected to play a key role where the substitution of petrol with CNG in the backdrop of rising prices may taper the demand of petrol with 11 per cent growth during the eleventh month of the fiscal year 2018, igniting further competition from existing players to retain/increase market share in the backdrop of unfavorable trade practices.
- Advertisement -
- Advertisement -

Must Read