Karachi: Pakistan State Oil (PSO) convened its 50th Annual General Meeting, unveiling strategic initiatives aimed at maintaining its market position amid industry challenges. The company reported a recovery in its market share to over 40%, attributing the increase to factors such as product availability, competitive pricing, and efficient supply chain management.
According to JS Global, PSO plans to sustain its market share against over 40 competing oil marketing companies by refreshing its brand, opening new outlets in high-demand locations, and automating its supply chain. The management anticipates that while industry fuel sales may remain stable or increase slightly, challenges such as high fuel prices, government austerity measures, and the growing adoption of electric vehicles and solar energy are impacting demand. PSO is responding by introducing electric vehicle charging stations along major inter-city routes.
The management also highlighted that the enhancement of oil marketing company margins is linked to the automation of the retail network, with plans to complete this by March 2027. Additionally, the government is moving towards deregulating the sector, and PSO is preparing for this transition. Regarding circular debt, PSO's receivables have stabilized since February 2024, with a settlement plan being developed with the government and the International Monetary Fund.
PSO’s operations in the LNG sector, conducted under a government-to-government contract with Qatar Energy, are profitable on a standalone basis. Nevertheless, the overall business remains loss-making after finance costs due to a high effective tax rate. Despite recent disruptions in the Strait of Hormuz, PSO successfully secured and delivered LNG cargoes.
Local refineries are currently meeting 95-97% of domestic high-speed diesel demand, minimizing the impact of price differentials between imported and local products. PSO views the Pakistan Refinery Limited as a strategic asset that provides supply security and integration benefits. The refining industry requires significant investment for upgrades, with funding structures yet to be determined.
Management reported that negotiations related to the white oil pipeline to Peshawar are nearing completion, with construction expected to start soon. JS Global maintains a positive outlook on PSO, noting its favorable trading metrics and dividend yield.