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KARACHI:
State-owned Pakistan State Oil (PSO) has diversified its business as it set up fintech, venture capital and renewable energy companies in an effort to continue earning revenue of trillions of rupees.
It comes at a time when the company’s core energy business is experiencing a historically low demand and high circular debt in the wake of economic slowdown and soaring inflation in the country.
In the Annual Report 2023 submitted to the Pakistan Stock Exchange (PSX) on Wednesday, PSO Chairman Asif Baigmohamed revealed that the group was well positioned to embark on the next phase of diversification and growth.
“In line with the long-term strategy of diversification, PSO has formed new companies like Cerisma (Private) Limited, PSO Renewable Energy (Private) Limited and PSO Venture Capital (Private) Limited, which open new avenues and opportunities for growth and are creating value for our shareholders,” he said.
The current economic scenario coupled with circular debt and geo-political turbulence would continue to impact the demand and supply of petroleum products and the group’s financial capabilities, he said.
Managing Director and CEO Syed Muhammad Taha added, “We are dedicated to expanding our presence in the rapidly evolving fields of fintech, clean energy and renewables.”
PSO is making significant strides in the execution of its long-term corporate strategy for diversification by venturing into the dynamic fintech industry with Cerisma (Pvt) Limited, a non-banking finance company.
“Cerisma (Pvt) Limited unlocks a multitude of opportunities for us to explore and capitalise on. By diversifying into fintech, we are poised to effectively manage and mitigate risks while consistently delivering substantial value to our shareholders,” the CEO said.
Being at the forefront of clean energy initiatives in Pakistan, the company is actively working to reduce its carbon footprint and promote environmental stewardship.
“With the establishment of PSO Renewable Energy (Pvt) Limited, a pioneering entity, we are dedicated to developing and implementing renewable energy assets and commercial projects in alignment with the government’s renewable energy policy,” he said.
“As a first step, PSO has commissioned its inaugural solar power plant at Shikarpur terminal this year.”
In addition, its subsidiary Pakistan Refinery Limited (PRL) is ready to harness the full potential of incentives offered by the brownfield refining policy.
PRL has enlisted the services of a renowned consultant to perform the front-end engineering design (FEED) for its refinery upgrade and expansion project to increase the capacity and sustainability of the plant.
The oil marketing company, having over 50% market share, has strengthened its storage infrastructure, maintaining an impressive operational availability rate of over 90% throughout the year. About 79,000 tons of existing storages have been successfully rehabilitated and an additional 91,000 tons of storages at Faisalabad, Faqirabad and Mehmoodkot terminals are currently under construction.
The company is also in the process of acquiring land in K-P and Punjab for further storage enhancement to meet the increasing fuel needs of the nation. “These developments will enable PSO to achieve a nationwide storage capacity of 1.23 million tons by year-end,” MD Taha said.
PSO has reported gross revenue of Rs3.6 trillion for FY23 compared to Rs2.7 trillion in FY22.
Despite an unfavourable price regime that had a negative impact on gross profit and a staggering 754% increase in financial costs amounting to Rs40 billion, the company closed the year with an after-tax profit of Rs5.7 billion. As a group, PSO and PRL collectively achieved a net profit of Rs9.3 billion.
Published in The Express Tribune, October 5th, 2023.
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