PSO’s price differential claims paid in full

KARACHI: The government has cleared all the outstanding price differential claims (PDCs) of Pakistan State Oil (PSO), accumulated owing to sale of diesel and petrol at the rates locked by the last government for three and half months.

“The state-owned PSO ensured the fuel supply when other marketing companies (OMCs) were reluctant due to high PDC,” the PSO management said during an analyst briefing on Tuesday.

According to analysts, PSO’s market share in white oil market improved from 45 percent in the first nine months of last fiscal to 48 percent in the same months of this fiscal. On the other hand, PSO’s market share in black oil market improved to 57 percent from 53 percent.

In nine months of this fiscal, the company registered strong volumetric growth of 16 percent and 27 percent in petrol and diesel, respectively. “The company would strive to continue with the growth momentum in FY23, however a sharp rise in product prices could slow down the growth,” management believed.

Demand for furnace oil (FO) will be dependent upon the outlook on alternative fuel sources (LNG, coal) availability and prices going forward.

The PSO management said that company was still waiting for more details on super tax and reduction in turnover tax for Oil Marketing Companies (OMCs).

“If turnover tax is reduced for OMCs, it will be positive for the company as it has been a key demand by the industry,” the state oil company said.

According to analysts, PSO reported profitability of Rs65 billion in the first nine months of this fiscal compared to Rs18.2 billion in the same period of last fiscal on the back of large inventory gains as crude petroleum product prices increased substantially. As per management, around 40-45 percent profitability arises from inventory gains.

Overall PSO volumes grew by 22 percent YoY in liquid fuels, outperforming the industry growth rate of 13.6 percent, capturing its market share by 3.4 percent to stand at 48.3 percent compared to 45 percent in FY21.

The growth is primarily determined by volumetric sales of MS (15 percent), HSD (26 percent) and FO (22 percent) against the industry growth in sales volumes of MS (8.8 percent), HSD (17.8 percent) and FO (13.9 percent), which led to increase PSO’s share in these product by 2.5 percent in MS, 3.3 percent in HSD, and 3.7 percent in FO.

“The management intends to focus on growth trajectory prospects going forward and maintain its current trend of profitability,” it said. Currently, PSO’s 3,500 retail outlets are operating in the county, and the company expanded its retail footprint by adding 39 more new outlets during nine months of this fiscal.