Abou

t Us
   
PSO is the market leader in Pakistan’s energy sector. The company has the largest network of retail out
automotive sector and is the major fuel supplier to aviation, railways, power projects, armed forces and
sector. PSO also provides Jet Fuel to Refueling Facilities at 9 airports in Pakistan and ship fuel at 3 port
takes pride in continuing the tradition of excellence and is fully committed to meet the energy needs of
  challenges of tomorrow.

Pakistan State Oil, the largest oil marketing company in the country, is currently engaged in storage, dis
marketing of various POL products. The company’s current market share of 82.3% in the black oil mark
share in the white oil market, alone speak volumes about its success.
   
  PSO Major Highlights - FY 2009
   
Sold 7 million tons of furnace oil – the highest in the last 8 years
Efficiently managed supply to the power sector despite the liquidity crisis
Imported approximately 90% of the country’s POL imports - 3.4 million tons of HSD and 5 million
tons of FO
  Helped in the revenue collection of more than Rs. 161 billion to the GOP (Sales Tax: 97 billion, taxes
1.4 billion,PDL: 61 billion)
Extended support to various charitable organizations in the health & education sector including
contribution for the rehabilitation of IDPs due to the Swat operation
   
Products & Services
   
  PSO caters to POL requirements of
of customers comprising the retail c
various industrial units, governmen
projects, aviation and marine sector
We are truly the drivers of economy

A network of 3612 retail outlets ena

Pakistanis from Nagarparkar to Sos
to cater to the fuel and non fuel nee
approximately 2.8 million customer

PSO industrial consumer dominanc

government sector can be judged by
the major government entities like O
Army, Pakistan railways, Navy, NL
and HIT have entrusted PSO to mee
needs. 
 Besides supplying fuel to national p
like WAPDA and KESC, PSO is th
oil supplier to all Independent Powe
(IPPs) in Pakistan with a share of ov
furnace oil market. Moreover, PSO
its due role in meeting the growing
of the country. 

PSO also supplies fuel to industrial

textile, cement, agriculture, transpo
industrial consumer base includes p
entities like the Presidency and the
Secretariat, where PSO has develop
outlets for timely refueling of their

Furthermore, PSO also serves the fu

national & international air carriers.
provide jet fuel into-plane refueling
airports of Pakistan i.e. Karachi, La
Peshawar, Multan, Faisalabad, Turb
Sialkot. 

We also supply fuel to ships at Kara

Korangi Fish Harbour & Port Qasim
cater to the fuel requirements of Pak
Maritime Security Agency, Karachi
PNSC, Faisal Marine Oil Services (
   
Retail Fuels
 
 
Gaseous Fuels
   
  Introduction of
Gaseous Fuels:
Since more than
a decade,
Pakistan has
witnessed a
remarkable shift
of consumers
from petroleum
to gaseous
energy sources.
Over the years,
‘Gas’ has
become a
preferred energy
source for the
consumers,
mainly due to
the price
competitiveness.
Resultantly,
CNG/ LPG have
become ‘The
Fuel’ for the
automotive
sector, which
are slowly and
gradually
replacing
conventional
liquid fuels. 

In such market
scenario, being
a dynamic
energy
company,
strategic and
focused
diversification
has been
 inevitable for
PSO, in order to
maintain the
market
leadership
position. 

Therefore, in
order to focus
this business
segment with
full trust and to
ensure active
participation in
ventures related
to CNG and
LPG, a separate
segment for
‘Gaseous Fuels’
has been formed
in 2006. This
highly lucrative
and potential
energy segment
looks after the
existing
business of
CNG and LPG,
vis a vis
capitalize on
business
projects related
to CNG and
LPG.
   
 
PSO joins Earth Hour 2011
 
Pakistan State Oil joined the Earth Hour campaign to spread awareness on climate change
and inculcate responsible behavior amongst its employees on March 26, 2011. In keeping
with its theme �The earth needs a break� all lights were switched off at PSO Head Office
and regional offices and were dimmed at its retail outlets across the country.
 
Commenting on this initiative, Irfan Qureshi, Managing Director PSO said, �We are proud
to share this experience with the rest of the world in support of the environment. At PSO,
we are committed to conserve energy and to mitigate negative impacts of our operations on
the environment, including minimising our fuel use and emissions. We request our nation
to wisely use our power, water and other resources and to recycle wherever possible.�
 
To show their support for efforts to support the environment, PSO employees also
celebrated Earth Hour in their individual capacity by switching off lights at their homes at
8.30 PM.
Earth Hour is the world�s largest global climate change initiative. It�s a global
commitment led by (WWF) World Wide Fund for Nature for energy conservation, climate
change and global warming. Earth Hour started in 2007 in Sydney, Australia when 2.2
million homes and businesses turned their lights off for one hour to make their stand
against climate change. Only a year later Earth Hour had become a global sustainability
movement with millions people across the world.
 
In 2010, over a billion people from 128 countries took part in the initiative by switching off
unnecessary lights for one hour to protect the planet.
 
PSO as the largest energy sector company is dedicated to meet all energy needs of the
nation in a timely and responsible manner. 
 
PSO amongst Top 100 Companies

Pakistan State Oil achieved yet another landmark in its 34 year history today, when it was honored for
its exemplary performance and results by being ranked 20th in the 7th Annual Dinar Standard survey
published in the �Top 100 Businesses of the Muslim World�. This achievement was further
underlined by the fact that PSO was the only Pakistani company that was listed amongst this august
group of commerce giants. The survey conducted by the Dinar Standard Consultancy compiles and
releases a list of the top 100 companies present in the 57 member Organization of Islamic Conference
(OIC) on annual basis.

Recognition of PSO�s performance by an accredited international agency is further

testament to the current management�s sagacious planning and sound business
policies, which have resulted in PSO posting a record half yearly profit of Rs. 7.13
Billion in the 1HFY11, even in the face of rising circular debt.

Commenting on the success of PSO in international quarters, Mr. Irfan Qureshi, the
beaming MD of PSO said: �It is an honor for Pakistan State Oil to be ranked
amongst the Top 100 Companies in the Muslim World. This honor has only
increased the onus of responsibility on the Company to ensure that we continue to
showcase remarkable performance in the future. As the largest energy sector
company in Pakistan, PSO will continue to serve the needs of the nation in a
responsible manner.�

Not simply content with being mentioned PSO has also boosted its performance
across the board, by growing from the 29th slot to the 20th slot in a period of 2
years, with a recorded revenue increase of 21.48% this year. This year�s results had
Turkish firms bagging the lion�s share of the list with an impressive 20 firms on the
list, while Saudi Aramco continued to hold onto the top spot despite suffering a 42%
negative revenue growth rate in 2010.
Marketing of petroleum products is set to witness a paradigm shift. Post deregulation of the sector, private
players are entitled to open new outlets provided they fulfill certain investment condition. Ever increasing
need and expectations of the customer is changing the operational economics of the retail outlet.
Consumers are demanding more convenience in the form of comfort, product options and fleet-monitoring
services. While retail outlets are heeding to them and revamping their operations by offering better visual
identity, fuel branding, value added services offering to the vehicles moving into the outlet, issuing petro
cards, fleet monitoring services and providing one-stop shop for consumers. In this write up we analyse
the operational economics of a retail outlet and different marketing models.

Classification of retail outlets

Type ‘A’ sites

 ‘A’ sites are outlets where the land is owned or leased by the OMCs (Oil Marketing Companies). 

 Building and equipment are also owned or leased by OMCs 

 Usually these outlets are COCO (company owned company operated outlets). 

 These have significantly increased over the past few years 

 These outlets offer the largest degree of control over the retail operations. 

 Offer best facilities and are at premium areas. 

 Average cost of building a new outlet is Rs 45 m; cost is on the higher side due to favorable
location and premium offerings at the outlets. 

 These sites are situated at places where throughput is expected to be higher.

Type ‘B’ sites

 Dealers at these sites own or lease the land and building, however they leaseback the same to
the OMCs. 

 Equipment is owned by the OMCs.

Type ‘C’ sites

 Dealers own or lease the land and building 

  OMCs own the equipment 

 Cost ranges up to Rs 1 m

Type ‘C1’ sites

 Dealers own or lease the land, building and equipments.

Market segment analysis

The marketing segment can be segregated into four major categories classified based on the throughput
per outlet and the offering needs at the location.

Rural segment This segment has a lower throughput per outlet. The major demand at these outlets is for
diesel, as the same is required for running pump sets for agricultural purposes. The sale of petrol is lower
at these outlets due to lower number of vehicles in the rural areas, combined with the problem of
adulteration. An added advantage from rural sales is potential revenue being generated from non-fuel
businesses (in the form of seeds, fertilizers and tractor parts). The cost of establishing such outlets
ranges between 0.5m to 1 m. The penetration in segment is very low. Sensing the opportunity, major
OMCs like IOC, HPCL and BPCL are venturing into the segment on a large scale. Companies also use
mobile moving vans in the rural areas so as to cover a wider geographical area. Dealer Owned Dealer
Operated (DODO) model seems to be the best fit here as it reduces the overhead cost and the chance of
significant penetration in these areas by private players is fairly limited for next few years.

Semi-Urban segment: The major demand at these outlets exists for petrol and diesel. The throughput
per outlet in the segment is on the higher side compared to that of rural outlets. The services required are
also on the lower side, as the customers in the segment are less savvy compared to urban customers.
The suitable marketing model for the segment is Dealer Owned Dealer Operated outlets (DOCO) or the
Company Owned Dealer Operated outlets. The choice here is based on case-to-case basis for every
outlet.

Metro segment The segment is characterized by high thruput per outlet for petrol and diesel. The value
added services needs in the segment are in the form of car wash, air checks, premium and branded fuel
in addition to better visual identity. COCO model is best suited for the urban segment so as to prevent the
dealer poaching coupled with fulfilling the requirements of the savvy customer. However, with pre-existing
dealers operating in the urban areas, the scope for establishment of new outlets is fairly limited. Thus the
possibility of having Dealer Owned Company Operated (DOCO) outlets exists in the segment it at all an
opportunity is sensed.
Highway Segment: Fleet operators and transporters are the major users of the highway segment. The
throughput per outlet at these outlets is on the higher end (particularly for the diesel). The throughput to
the extent of 4-5 times the average industry throughput makes up for the higher capital required to open
such outlets. The non-fuel revenues at these outlets are comparative on the higher side as these outlets
provide one-stop shop along with fleet management services in the form of single billing, repair facilities
and other conveniences to the drivers. Also, offerings such as ATMs and food courts augment non-fuel
revenues from the segment. The COCO (Company Owned Company Operated) model is most suitable
here due to increased value added services required along with complexities of operation in the form of
synergies with other outlets for single billing facility.

Conclusion The determination of the marketing model depends on a number of factors including

geographical location, local tax rates, throughput and proximity of competitors in addition to offerings
needed by the customers. During the pre-liberalization period, OMCs had exclusivity in sales of retail fuel,
thus the Dealer Owned Dealer Operated (DODO) model worked well. However, with deregulation and
changing customer needs, COCO model has its inherent benefits. Thus, the whole process of model
determination is to increase the throughput per outlet and thereby sales and reducing the overhead cost
of maintenance and running of the outlets.