After criticism, PSO defends recent business deals

Board of directors also reviewed oil marketing giant’s financial performance۔

KARACHI: Pakistan State Oil (PSO) Managing Director Naeem Yahya Mir on Thursday defended all the recent business deals and initiatives that the PSO management took in recent months and said that the people with vested interests in the industry are raising criticism.

“The PSO management has not violated any Public Procurement Regulatory Authority (PPRA) rules in awarding new contracts,” said Mir while speaking to a press conference at the PSO head office. “Whatever deals we have made recently are all in the business interest of PSO.”

We were cutting down all possible middlemen from the business model of the company, he said, adding that this was why few people had been irked as their interests were hurt in the process.

The press conference was mainly called to dispel the negative press that PSO’s business deal received in recent days. PSO signed a five-year agreement a few months ago to buy $1 billion blended oil each year from Bakri Trading – a Saudi Arabian oil trader with 700,000-1 million tons every three months to Pakistan.

PSO says that the deal is in the company’s interest mainly because PSO will pay the Saudi firm in Pakistani rupees instead of US dollars. Bakri Trading will import oil, blend it and then supply it to PSO.

“Since, we have only one player in the oil blending business in Pakistan, PPRA rules do not apply to this deal,” Mir said, “If we had more than one player, the situation would be certainly different and we would follow all the bidding process.”

Replying to a question, he said he had all the required backing of the board of management; otherwise he would not have been able to implement new business models in PSO.

PSO management said that Bakri Trading had all the required approvals from Government of Pakistan when the two companies signed the deal.

PSO signed an agreement with the Pakistan National Shipping Corporation (PNSC) for the transport of furnace oil from foreign ports to Pakistan’s shores. The deal was also being criticised in the media but PSO chief says that the deal will help grow the local shipping sector and increase the oil marketing company’s profitability.

Board of directors review financial performance

PSO on Thursday said that the company revenues touched Rs325 billion compared to Rs279 billion in the first quarter of fiscal year 2013 representing a growth of 16%.

The board convened, on Thursday, at PSO house to review the company’s performance for the period.

In the period under review, PSO enhanced its domination of the market with its share in both the black oil and white oil segments improving to 80% and 57.4% respectively. Resultantly, PSO achieved an overall market share was 68.1%.

The board, however, expressed concern on the rising balance of receivables, including price differential claims, which stood at Rs176 billion as at September 30, 2012, a PSO press release on Thursday said.

They observed that financial costs associated with servicing the debt coupled with consistent non-payment from the power sector continued to hurt the overall profitability of the company and directed efforts to be made to reduce the impact of the burdening financial costs.

Published in The Express Tribune, October 26^th, 2012.