KARACHI, Oct 24: Rise in retail prices of various products pushed up sales revenue of the Pakistan State Oil (PSO) to Rs222 billion in July-September 2008-09 as compared to Rs122 billion in the same period of 2007-08.

The loss-after-tax came to Rs8.38 billion during the first quarter of 2008-2009 versus profit-after-tax of Rs2.1 billion during the first quarter of 2007-2008.

The company reviewed the performance in its board of directors meeting, presided over by PSO chairman Sardar Yasin Malik on Friday.

The decline in the profitability was mainly due to heavy inventory losses suffered by the PSO on account of sharp fall of 35 per cent in international oil prices during the quarter under review as against an increase in the same quarter of the last fiscal year.

The 13 per cent devaluation of the rupee against the dollar severely hampered company’s profitability as the company handled more than 80 per cent of imported oil products. These factors also hit other players in the oil sector.

The overall petroleum products consumption declined by two per cent during the quarter owing to economic slowdown. However, the company remained a market leader with 71.4 per cent market share.

Had there been no inventory and exchange losses and high interest due to borrowing, the company would have made a profit-after-tax of approximately Rs3 billion.

In compliance with the accounting standards, the PSO also adjusted the inventory values for the reduction in product cost subsequent to the balance-sheet date.

The company faced serious liquidity problems due to receivables from IPPs (Hubco, Kapco and Pepco) and PIA which defaulted on payments to PSO. As on Sept 30, 2008, receivables from these entities stood at Rs49 billion adding to company’s cash flow problems.

At present, outstanding dues from Hubco, Kapco, Pepco and PIA stand at Rs61.4 billion.

Besides receivables from the IPPs and PIA, the price differential claims (PDC) also added to the liquidity crunch situation of the company.

Due to rising international prices in FY2008, government provided a high level of subsidy to consumers. The subsidy accumulation on account of PDC reached Rs36.7 billion during the quarter. However, reimbursements of Rs24 billion were received from the government during the quarter, thus mitigating the cash flow crunch to some extent.

In the backdrop of declining global oil prices, subsidy on diesel has been reduced substantially, and on Oct 22, the PSO received Rs8.34 billion from the government which reduced the subsidy to Rs11.8 billion.