PSO – Swimming Against the Tide

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PSO By Yasir Ameen

A commercial marketing and refining expert Mr. Naeem Yahya (Managing Director of Pakistan State Oil) has over 21 years of experience in leading national and multi-national oil companies with an emphasis in downstream operations including marketing, distribution, refining and shipping.

Combining in-depth technical knowledge and an extensive experience of marketing POL products, Mr. Naeem has developed expertise in multiple disciplines including sales and marketing, supply chain management, quality control, product development, refinery upgrades and workforce development. A multi-cultural leader with a strong track record of driving revenue growth and profitability, he has successfully negotiated multiple global contracts with decision makers in more than 20 countries across the Middle East, Far East andEurope.

Mr. Naeem is also a lifetime member of the Pakistan Engineering Council as well as a member of theInternationalFuelQualityCenter, the American Institute of Chemical Engineers and the Canadian Society for Chemical Engineering. Mr. Naeem Yahya is currently the Managing Director of Pakistan State Oil. He holds a Master’s degree from Heriot-Watt University and a Bachelor’s degree in Chemical Engineering from Punjab University.

 

What motivated you to accept the challenge to transform Pakistan State Oil (PSO) from a financial crippled organization to a profit-making entity?

I have vast experience of working with different oil giants of Middle East, Europe andFar Eastcountries. I always wanted to serve my nation therefore I accepted the challenge to turn PSO from a financial crippled organization to a profit-making entity without any hesitation.

I firmly believe that new ideas are the lifeblood of business and the operative assumption today is that someone, somewhere, has a better idea. The operative compulsion is to find out who has that better idea, learn it, and put it in action – fast.

Despite the financial constraints of the company in the form of ever increasing circular debts, I remain committed to push PSO towards the road of success and its evolving role in the energy needs of the country.

In a short period of time, PSO under my leadership and my team’s support achieved a milestone of becoming the first public sector company to cross the Rs. 1 trillion rupee revenue mark.

 

 

What initiatives have you taken to streamline the business of Pakistan State Oil (PSO)?

PSO has been stuck in a financial quagmire due to heavy accumulation of receivables from its commercial customers, mainly power generation companies. It is earning Rs 2 billion every month which is a solid point for a company to survive despite of cash shortage.

I have changed the entire payment cycle of the company and released payments to partner refinery companies who were suffering from severe financial losses due to non-payment. However, this action is ethically wrong, as a company has to pay its partners whether it is international or national.

I cleared the bills of the refineries on time which improved their production and provided a steady supply of oil products on credit to PSO during difficult times. I have established strong ethical business practices in the company and maintained a balance of payment with all partner companies. PSO can now easily purchase various imported oil products against pak rupee instead of dollar. I empowered the company’s partners and saved its money which was lost in the conversion of dollars.

 

Do you have any plans to expand the business of PSO?

I have made plans to transform PSO as an integrated energy company having self-made resources and autonomous operation control. I will take PSO forward and make it more than just an oil marketing and distribution company. My aim is to turn PSO into a fully integrated firm encompassing facets of exploration, refining, transportation and shipping.

I have devised a plan to develop a vertical supply chain under a single organizational umbrella similar to international oil giants like PetroChinaand Petronas on a global scale.

By implementing this plan we will not only reduce operational costs, but also be able to reduce our dependence on external supply sources and develop self-sufficiency in the energy sector. By espousing a strategy of rapid plan development and decision making, I am working to turn these plans into reality by enhancing links with upstream organizations and building PSO’s reliance on its own logistical network.

Through this process, we hope to develop a chain stretching from production to distribution and thus generate greater returns for the company and country in the future. The integration will lead to creation of job opportunities and will also provide training to many individuals for leadership positions.

My future roadmap also includes exploring new product markets, expanding lubricants product range, further expansion of the company retail network and reducing product movement costs. To achieve these goals, PSO will be focusing on operational streamlining, cost reduction, minimizing product losses, expanding cash sales and improvement in quality and quantity testing to ensure provision of premier products to its valued customers.

 

What are your initiatives to reduce financial losses of the country?

I have taken certain measures to reduce extra cost of the operation through eliminating the role of the middleman in the overall business of PSO.

PSO maximizes product upliftment from local sources/ refineries by entering into a Sales Purchase Agreement. This will reduce Forex by more than $200 million annually.

The company saved approximately US$ 11.8 million by directly importing base oil from (Exxon Mobil) in the recent past. It acquired a waiver from KPC of US$ 0.6 million for the demurrage occurred during floods 2010. Plus, a further waiver of US$ 1.8 million is being processed. Moreover, PSO also reduced its expenses of HSFO cargo in September resulting in a saving of Rs. 10 million.

The company has stopped the blending of Afton Chemicals additives (DETERGENTS) in Mogas and Diesel which will save approximately Rs. 635 million. I ended the War Premium Insurance payment in the imports of POL products which will reduce its extra expenses of Rs. 450 million.

I have signed a three-year contract of freightment with Pakistan National Shipping Corporation (PNSC) subject to yearly renewal.  PSO will pocket savings of Rs. 500 million by engaging National flag carrier PNSC.

An oil blending company Bakri is also investing in Pakistan and will substitute oil import through supplies of our required products. The company will supply 1.4 million ton fuel oil. This will reduce our cost of dollar conversion as purchasing will be carried out in the local currency.

I have taken several measures to reduce the business cost of the company and its impact on customers as well. The petroleum products having extra additive components keep their prices higher even though their removal will not affect the productivity of fuel but will give relief to the nation in terms of price reduction.

I encourage all stakeholders and partners to bring in new and innovative ideas to increase revenue streams for the company.

How do you facilitate customers?

I firmly believe that customers should be provided with best quality of fuel for their vehicles on time at affordable prices. Unfortunately, prices of the petroleum products cannot be controlled but we can minimize the affect of price hike on various oil products through cost cutting and long-term development plans.

 

PSO ensures the supplies of their dedicated customers across the country because it receives non-stop cash from retail side of its business. But there are certain practices of closing retail outlets whenever the prices of petroleum products are revises and customers ultimately suffer hardships.

 

What would you like to say about government announcement procedures about petroleum products?

The government should not disclose the prices of petroleum products in advance but should communicate the variation in prices to oil marketing companies and retailers few minutes before the price implementation. Only then, the retail outlets will not be able to manipulate sales to pocket extra margins from the customers.

We have also launched best quality lubricants according to the need of the vehicles.

 

What are your future plans?

As Managing Director of the nation’s leading state owned organization, it is my vision to make history by making PSO, the best corporate firm in Pakistan within a period of two years, a regional player in four years and a member of the Fortune 500 companies worldwide within a period of six years.

The core objective of any firm is profitability while containing its operational costs. This would in turn translate into cost benefits for the Government and the general public.

We have planned to establish 100 sales points of autogas for their vehicles in line with the government policy to substitute Compressed Natural Gas (CNG) from Liquefied Petroleum Gas (LPG). PSO will take lead to establish new energy point of sales.

I am also revamping the human resource structure to ensure we have the right people for the right job and also to motivate and inspire them to work together to achieve organizational goals. I introduced a concept of self-sufficiency of the oil marketing company through effective supply chain resulting in an increase in company profitability and viability beneficial for our stakeholders.

 

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