Two big problems plague PSO. One is being fixed. The other not so much

It is no secret that Pakistan State Oil is a behemoth. With assets worth more than Rs 1 trillion, it is evident that the size and scale of its operations is beyond comprehension. Both in terms of commercial and industrial operations, the length and breadth of their presence is difficult to avoid. With operations of this size, it is no wonder that the sales of the company are more than the Gross Domestic Product of Monaco worth more than $10 billion. This has been complimented by the fact that the profits have also mirrored the upward trajectory being seen in its sales.

The issue for the company has been the fact that the high amount of profits are coinciding with a deteriorating cash and credit situation which is proving to be an obstacle to the unobstructed flight that could be seen. At one hand is the circular debt which is leading to a bloated asset being created on the balance sheet. On the other hand, is the lack of better management to address the finance cost that is being experienced by the company. This aspect becomes magnified when it is seen that there are reserves of cash which can be utilized by the company. Sadly, this is not being done which is impacting the profitability of the company as well.

With the resolution of circular debt on the cards, there is a need for the management to utilize its resources better to fully unlock the potential that is present at the company.