Pso Research Report

CONSUMER PREFERENCE SURVEY
“COMPARATIVE ANALYSIS OF
OIL MARKETING COMPANIES IN PAKISTAN, WITH SPECIAL
REFRENCE TO SERVICES PROVIDED BY PSO.”
Submitted By:
KASHAN PIRZADA
Submitted To:
Madam Farah Nawaz
Date of Submission:
19th May, 2008
“METHODS IN BUSINESS RESEARCH”
BAHRIA UNIVERSITY RESEARCH REPORT

Methods & Business Research
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Table of Contents
Acknowledgement..................................................................................3
Research Process……………………………………………………….4
Executive Summary................................................................................5
Observation.............................................................................................6
Preliminary Data Collection....................................................................6
History & Background of PSO, SHELL & Caltex..…………………….7
Literature Survey.....................................................................................17
Problem Definition..................................................................................33
Identification of variables……………………………………………….33
Development of Hypothesis....................................................................45
Research Design......................................................................................37
Questionnaire Analyses………………………………………………....38
Analyses & Interpretation of Questionnaire……………………….…..41
Work contribution Graph………………………………………………54
Sample Questionnaire…………………………………………………...55
Conclusion..............................................................................................58
Recommendations...................................................................................58
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ACKNOWLEDGEMENT
First and foremost, we would like to think Almighty ALLAH for guiding us and
helping us in every path of our life, even in the smaller material things like this
report.
We are also thankful to our parents for their unconditional love and support in
whatever we do.
A special mention goes out to all those people who gave us a part of their valuable
time to fill up the questionnaires hence enabling us to conduct the research survey.
And last, but not the least, we would like to convey our sincerest thanks to our
respected teacher, Madam Farah Nawaz, who approved our choice of topic and
provided us with the necessary guidelines and requirements so as so help us with
the progress and structure of our report. Working on this report has been a
gratifying experience for all of us.
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EXECUTIVE SUMMARY
Pakistan is a country that is undergoing rapid economic growth, and investment in
every major sector is on the rise. And the port city of Karachi has a huge role to
play in this as well. With the growth in population, the man power has contributed
to the economy as well, whether it is the common labor or the high-profile banker.
Hence, more population meant more vehicles, be it the trucks used by the factory
workers, or the luxurious cars owned by certified accountants.
Therefore, to cater to the growing needs and demands of these vehicle drivers,
numerous petrol pumps of various fuel companies have sprung up in the city. But
out of the various companies, three fuel giants stand out of the crowd, namely
Pakistan State Oil (PSO), Shell and Caltex. With the rise in worldwide oil prices,
these companies now compete over each other for providing ‘better customer
services’. And this is what our research is based upon.
According to our estimates, people prefer PSO than Shell or Caltex. Hence, we
selected this topic for our research to find out the accuracy of our estimation and at
the same time to become aware ourselves and to make everyone aware of the
company that manages to satisfy its customers completely.
The following research was carried out through distributing questionnaires to a

sample of approximately 120 people from diverse backgrounds. Statistical tests of
Hypothesis were applied and the result derived. We have also included our
recommendations at the conclusion of the report.
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OBSERVATION
In Karachi we observed that in past five to ten years percentage of people who use vehicles has
increased. There has also been a steady increase in the prices of petrol & diesel. The oil
marketing sector mainly consist of three companies namely Pakistan State Oil Company, Shell
Pakistan and Caltex Pakistan. PSO enjoys the largest market share followed by Shell and Caltex.
In the changed market scenario profitability of these companies will be directly related to volume
of sales. Therefore, all the companies are investing heavily to improve the quality of services
being offered at their outlets.
PRELIMINARY DATA COLLECTION

Preliminary data is collected through:
• Observations
• Surveys (Literature Surveys that include articles from books and over the internet)
• Interviews
Following three types of information is searched from above mentioned resources:
• Background information of PSO, SHELL & CALTEX.

• Philosophy and guidelines.
• News articles related to these three companies and overall fuel industry.
• Performance of these fuel companies regarding customer services.
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Background Information of PSO:
Chronology of Events leading to the formation of:
Pakistan State Oil Co. Ltd. (PSO)

01-01-1974 Federal Government takes over management of PNO (Pakistan
National Oil) and DPL (Dawood Petroleum Limited), renamed into
POCL (Premier Oil Company Limited) under marketing of
Petroleum Products ( Federal Control ) Act, 1974.
Government incorporates "Petroleum Storage Development

03-06-1974
Corporation" PSDC.
23-08-1976 Name of PSDC changed to State Oil Company Limited (SOCL).
Government purchases ESSO Undertakings, vests their control in

15-09-1976
SOCL.
30-12-1976 Government merges PNO and POCL into SOCL (State Oil
Company Limited) and names it as Pakistan State Oil Company
Limited (PSO).
PSO VISION:
To excel in delivering value to customers as an innovative
and dynamic energy company that gets to the future first.
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PSO COMPANY PROFILE:
Pakistan State Oil (PSO) is the oil market leader in Pakistan enjoying over 82%
share of Black Oil market and 61% share of White Oil market. It is engaged in
import, storage, distribution and marketing of various POL products, including
Mogas, HSD, Fuel Oil, Jet Fuel, Kerosene, LPG, CNG and petro-chemicals. This
blue chip company, the winner of "Karachi Stock Exchange Top Companies Award"
and a member of World Economic Forum, has been a popular topic of case studies in
Pakistan and abroad based on its radical corporate turnaround over the last few years.
Excellence in Customer Service:
PSO serves a wide range of customers throughout Pakistan, including retail,

industrial, aviation, marine and government/defence sectors. Professionals at PSO
strive for providing unmatched and diverse services to the customers in line with best
international practices. PSO's state-of-the-art New Vision retail outlets are equipped
with the most modern facilities, including auto car wash, electronic dispensing units,
convenience stores, business centres, internet facilities and Easy Payment Centres for
payment of utility and Citibank credit card bills. The concept of Quick Oil Lube Vans
introduced by PSO, provides the lube change facilities at customers' doorsteps. About
21 Mobile Quality Testing Units ensure top of the line quality of products and
services. As innovative customer service initiatives, PSO has launched Loyalty Card,
Corporate Card, Fleet Card and Prepaid Card. These cards provide added
convenience, flexibility and security to the customers while enabling them to earn
redeemable loyalty points and avail attractive discounts for purchase of non-
petroleum products at a large number of merchant outlets in various cities on use of
Loyalty and Corporate Cards.
For efficient handling of customer complaints, queries and suggestions, PSO has
developed Customer Service Centres at all its 14 divisional offices. Furbished with a
toll free telephone number (0800-03000) and automated customer feedback
registration system, these centres provide an efficient system of 24-hour customer
care. An attractive and comprehensive.
Total Quality Control:
PSO has been meeting the country's fuel needs by merging sound business sense with
national obligation. In order to satisfy the customers' needs while ensuring the highest
quality of products and services, PSO has introduced total quality management
system in its operational activities. Consistent conformance to prescribed standards
and specifications across the whole range of activities from receipt, storage,
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transportation and delivery of products is the cornerstone of PSO's quality

management system. In addition to quality assurance in upkeep and maintenance of
existing facilities, compliance with quality standards is ensured in construction of
new facilities like recently developed state-of-the-art facilities for Aviation customers
at Lahore Airport.
Health, Safety and Environment:
Ensuring the health and safety of PSO employees, contractors, customers and
members of public likely to be affected by the Company's operations is one of the
basic corporate objectives, and as a priority it ranks equally with market share and
profit. Accordingly, it is the Company's policy to perform work in the safest
practicable manner, consistent with best industrial practices while adhering
completely to the requirements of health and safety codes and practices. The
Company's Health, Safety & Environment (HSE) Steering Committee monitors HSE
compliance on regular basis while HSE Site Committees ensure that HSE
Requirements are met at all operating locations, including Depots, Terminals, Plants,
Retail Outlets and Airports. Use of relevant safety equipment at work is mandatory
for employees. Regular HSE audit of facilities and HSE training of relevant staff is
carried out and commissioning of new facilities is subject to HSE clearance.
Adequate resources are made available to ensure the success of HSE policy.
Corporate Social Responsibility:
PSO is highly committed to fulfillment of its corporate social responsibility and

believes that the benefits of the Company's progress and financial gains must flow
down to public at large upto the grassroots levels, particularly to the under-privileged
and deprived sections of the populace irrespective of ethnicity, caste and creed. PSO
has undertaken a wide range of initiatives to support several social, health and
educational programs. Such initiatives include instituting gold medals, cash awards
and scholarships for top students of leading professional educational institutes,
providing computer training to students and other residents of Badin district in rural
Sindh province through a well facilitated training institute established for this
purpose, providing moral and financial support in form of donation on compassionate
basis to charitable institutions, installing direction signs and traffic signals at major
streets and thoroughfares, supporting Citizen Police Liaison Committee and
sponsoring road awareness programs like Karavan Karachi for the children.
Reform of Corporate Governance:
PSO's comprehensive and far-reaching corporate renewal programme resulting in

dramatic corporate transformation has been widely appreciated at various national
and international forums, by world's leading consulting and financial advisory firms
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and by leading educational institutions. This programme covers the revamping of the
organizational architecture, rationalization of staff, employee empowerment and
development, and efficiency and transparency in decision-making through Cross-
Functional Teams.
PSO's corporate structure has evolved into a matrix, which has divided the
Company's major operations into independent activities supported by the financial,
legal, information and other services. These activities operate in an autonomous and
collegial manner in the form of Strategic Business Units based on the clear and
transparent allocation of responsibility and accountability. This structural change has
been reinforced and related checks and balances have been established by putting in
place several corporate monitoring and control systems.
One of the top priority areas of PSO's corporate reform is Human Resource
Development. The Company has undertaken several initiatives to ensure induction
and training of professionals with the objective of ensuring high level of
professionalism and productivity at all levels of its employees. Through computer
training, various in-house courses, sponsorship of staff for studies at professional
institutions and seminars, the Company is providing its employees the opportunities
for continuous development and learning.
Effective implementation of corporate reform and business development strategies in

line with best international practices has enabled PSO to maintain its market
leadership position in a highly competitive business environment
PSO MISSION STATEMENT & VALUES
We are committed to leadership in energy market through competitive advantage in

providing the highest quality petroleum products and services to our customers,
based on :
Professionally trained, high quality, motivated workforce, working as a team

in an environment, which recognizes and rewards performance, innovation
and creativity, and provides for personal growth and development
Lowest cost operations and assured access to long-term and cost effective
supply sources
Sustained growth in earnings in real terms
Highly ethical, safe environment friendly and socially responsible business practices
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PSO VALUES
Excellence
We believe that excellence in our core activities emerges from a passion for
satisfying our customers' needs in terms of total quality management. Our
foremost goal is to retain our corporate leadership.
$ Cohesiveness
We endeavor to achieve higher collective and individual goals through team.
This is inculcated in the organization through effective communication.
Respect
We are an Equal Opportunity Employer attracting and recruiting the finest
people from around the country. We value contribution of individuals and
teams. Individual contributions are recognized through our reward and
recognition program.
Integrity
We uphold our values and Business Ethics principles in every action and
decision. Professional and personal honesty, dedication and commitment are
the landmarks of our success. Open and transparent business practices are
based on ethical values and respect for employees, communities and the
environment.
Innovation
We are committed to continuous improvement, both in New Product and
Processes as well as those existing already. We encourage Creative Ideas
from all stakeholders.
Corporate Responsibility
We promote Health, Safety and Environment culture both internally and
externally. We emphasize on Community Development and aspire to make
society a better place to live in.
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SHELL HISTORY:
The market for oil remained confined to lighting and lubricants until, in 1886, the internal
combustion engine and demand for gasoline arrived with Karl Benz and the first Mercedes. By
now the Samuel business had passed to Marcus Samuel junior and his brother Sam. They
exported British machinery, textiles and tools to newly industrialising Japan and the Far East and
on return imported rice, silk, china and copperware to the Middle East and Europe. In London,
they traded in commodities such as sugar, flour and wheat worldwide.
It was during a trip to Japan that Marcus became interested in the oil exporting business then
based in Baku, Russia. The Rothschilds had invested heavily in the 1880s in rail and tunnels to
overcome the transport difficulties of getting oil from this landlocked base to the Black Sea and
from there to overseas markets. Shipping still posed a problem as the oil was carried in barrels,
which could leak and took up much space in the ship’s hold.
Marcus and Sam commissioned a fleet of steamers to carry oil in bulk, using for the first time the
Suez Canal. They also set up bulk oil storage at ports in the Far East and contracted with Bnito, a
Russian group of producers controlled by the Rothschilds, for the long-term supply of kerosene.
Their strategy was high-risk: if news of their operations got out they would be squeezed out by
Rockefeller’s dominant Standard Oil. With the maiden voyage of the first bulk tanker, the
“Murex”, through the Suez Canal in 1892 the Samuels had achieved a revolution in oil
transportation. Bulk transport substantially cut the cost of oil by enormously increasing the
volume that could be carried. The Samuel brothers initially called their company The Tank
Syndicate but in 1897 renamed it the Shell Transport and Trading Company.
Petroleum was also being produced in the East Indies, a Dutch colony, and in 1890 a company
had been formed to develop an oilfield in Sumatra. This was the origins of what was to become
the Royal Dutch Petroleum Company. Under the management of J.B. August Kessler, they built
a pipeline and refinery at Pankalan Brandan. Kessler was joined in 1896 by a dynamic young
marketing director, Henry Deterding, who was to become a dominant figure in the company until
the outbreak of the Second World War. Faced with the competition from the Samuels’ low bulk
transport costs, Royal Dutch began the construction of tankers and bulk storage installations and
set up its own sales organisation.
By the turn of the century, Marcus Samuel had become the model of an Edwardian plutocrat
with a grand house in London and a country mansion, which had been bought lock, stock and
barrel with furniture, pictures and parkland from Lord Romney. He kept horses and carriage and
was active in public life in the City of London. He was knighted in 1898, became Lord Mayor of
London and was a leading figure in the London business community. But Marcus Samuel’s
dependence on Russian producers left him vulnerable and he decided to seek other sources of oil.
The Far East was the obvious place to look – and his first venture into Borneo brought him up
against Royal Dutch Petroleum, one of the region’s biggest competitors. The two companies
joined forces to protect themselves against the might of Standard Oil, forming a sales
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organisation in 1903, the Asiatic Petroleum Company. The discovery of oil in Texas offset a
series of troubles which had affected both companies.
In 1904, the scallop shell or pecten replaced Shell Transport’s first marketing logo, a mussel
shell. In various forms it has remained in use ever since, becoming one of the best known
corporate symbols in the world.
The full merger of the two companies into the Royal Dutch Shell Group came in 1907. There
were two separate holding companies with Royal Dutch taking 60% of earnings and Shell
Transport taking 40%. The business was run by a variety of operating companies. The merger
transformed the fortunes of both companies. Under the management of Henry Deterding they
turned from struggling entities to successful enterprises within twelve months.
The Group rapidly expanded across the world. Marketing companies were formed throughout
Europe and in many parts of Asia. Exploration and production began in Russia, Romania,
Venezuela, Mexico and the United States.
The first twelve years also provided many exciting opportunities to demonstrate the quality of
the products in the new, fast-developing market for gasoline. These included record-breaking
races, flights and journeys of exploration. In 1907, Prince Borghese won the Peking to Paris
motor rally on Shell motor spirit. The same fuel was used at the Brooklands racing track in the
UK. In the Antarctic, Shackleton and Captain Scott used Shell fuel, while Bleriot’s inaugural
cross-Channel flight was made on Shell spirit.
Marcus SAMUEL
SHELL IN PAKISTAN:
The Shell brand name enjoys a 100-year history in this part of the world, dating back to 1899
when Asiatic Petroleum, the far eastern marketing arm of two companies: Shell Transport
Company and Royal Dutch Petroleum Company, began importing kerosene oil from Azerbaijan
into the subcontinent. Even today, the legacy of the past is visible in a storage tank carrying the
date - 1898.
The documented history of Royal Dutch Shell plc in Indo_Pakistan subcontinent dates back to
1903 when partnership was struck between The Shell Transport & Trading Company and the
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Royal Dutch Petroleum Company to supply petroleum to Asia.
In 1928, to enhance their distribution capabilities, the marketing interest of Royal Dutch Shell
plc and the Burmah Oil Company Limited in India were merged and Burmah Shell Oil Storage
& Distribution company of India was born. After the independence of Pakistan in 1947, the
name was changed to the Burmah Shell Oil Distribution Company of Pakistan. In 1970, when
51% of the shareholding was transferred to Pakistani investors, the name of changed to Pakistan
Burmah Shell (PBS) Limited. The Shell and the Burmah Groups, retained the remaining 49% in
equal propostions. In February of 1993, as economic liberalisation began to take root and the
Burmah divested from PBS, Shell Petroleum stepped into raise its stake to 51%. The years 2001-
2 have seen the Shell Petroleum Company successively increasing its share, with the Group now
having a 76% stake in Shell Pakistan Ltd (SPL)- an expression of confidence.
Introduction of CALTEX :
Over the past 40 years, GS Caltex, which aims to be a total energy service leader, has been
pushing to not only perform in the petroleum and petrochemical businesses, but also to diversify
its energy business, thus leading the energy industry.
Furthermore, GS Caltex has expanded its business areas into city gas, LNG, electric power,
exploration & production, convenience retail, e-business, New and Renewable Energy, thereby
covering all energy fields and becoming a total energy service provider with global
competitiveness.
Through our products and services differentiating us from competitors, we will continue to strive
to achieve the vision of "The Leader in Providing a Total Energy Service."
Petroleum Business
GS Caltex has crude oil refining facilities with a capacity of 770,000 barrels a day, and provides
a stable supply of oil products to the nation. With Residue Fluid Catalytic Cracking Units
designed to crack 145,000 barrels of bunker C oil a day to produce high-valued products such as
gasoline, kerosene, and diesel, as well as advanced facilities such as those designed to
desulfurize 190,000 barrels of kerosene and diesel a day, GS Caltex proactively responds to the
rapidly changing market environment.
Additionally, we operate about 3,400 gas stations and about 300 gas filling stations nationwide.
In 1996 we opened Korea's first gas station-convenience store combined chain, JoyMart. This is
an advanced lifestyle station, a concept far beyond that of a gas station where oil simply is being
filled. Also, since 1994, we have been operating the light maintenance franchise chain,
AutoOasis.
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CALTEX IN PAKISTAN:
Chevron Pakistan Limited (formerly known as Caltex Oil Pakistan Limited) is a part of Chevron
Corporation (earlier known as ChevronTexaco Corporation), a leader in the global integrated
energy business. Chevron is the fifth-largest integrated energy company in the world.
Headquartered in San Ramon, California, and conducting business in approximately 180
countries, this highly competitive corporation is engaged in every aspect of the oil and natural
gas industry, including exploration and production; refining, marketing and transportation;
chemicals manufacturing and sales; and power generation.
With a diverse and highly skilled global work force of more than 59,000 employees, Chevron
and its people take great pride in a commitment to community partnerships, social responsibility
and environmental excellence.
Chevron Pakistan Limited has operated in the sub-continent since 1938 and apart from the main
oil storage facility at Karachi, has 10 Depots throughout the country, which includes three inland
terminals in Rawalpindi, Machike and Shikarpur.
The company’s Retail network consists of 598 outlets located throughout the country as well as a
wide spread distributor network catering to the demands of the Industrial, as well as the
Agricultural sectors. Chevron installed its first CNG facility at its Company managed retail outlet
at Islamabad. Subsequently, more CNG facilities have been added to the network in Karachi and
Lahore increasing the number of CNG refueling facilities to 66 nationwide. In addition, Chevron
has also established three CNG conversion kit centers.
Chevron Pakistan was the first oil marketing company to introduce many modern concepts in the
industry in Pakistan. A hallmark of its technical advantage in the industry is its state-of-the art
computerized lubricating oil blending plant, which has been set up and commissioned at the
West Wharf Terminal, Karachi. Chevron was the first in modernizing its retail outlets, installing
electronic dispensers and implementing Customer Service Systems. It was the first oil marketing
company to launch CNG station in Islamabad in 1998. Its modern testing laboratory fully
equipped with the latest equipment coupled with fully documented procedures was the first ISO
9000 accredited Oil Testing Facility in the country. It is also the first oil marketing company to
acquire ISO 14001:2004 International Environmental Management System for its West Wharf
Laboratory and West Wharf Lube Blending Plant . Chevron is the pioneer in establishing
Convenience Stores and introducing co-branded Cards in the market.
Recently, Chevron Pakistan received three awards in recognition of its world-class Health,
Environment and Safety Standards. Chevron Pakistan Lubricant Blending Plant was adjudged to
be the recipient of the ChevronTexaco Global Lubricants (CTGL) Safety Excellence Award
while Chevron Pakistan Marketing won the coveted ChevronTexaco “Zero Is Attainable”
Award. Zero is Attainable is a corporate HES annual award programme, that recognises
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organisations with exceptional Operational Excellence performance during a calendar year. This
is yet another acknowledgement of Chevron Pakistan’s exceptional performance and
commitment towards Health, Environment and Safety (HES) in all aspects of its operations.
Moreover Chevron Pakistan’ Keamari Terminal received “The Most Admired Terminal” award
for the year 2004 in the worldwide Chevron system.
In the refueling of International Airlines at Quaid-e-Azam International Airport, Karachi,
Chevron became the first company in the country to have its refueling facility, accredited with
ISO 9000 standards.
Chevron Pakistan took the lead in renovating, revamping and modernizing its Retail network
bringing the standards in line with its International image in order to provide quality products ad
services to their valued customers.
The company has undertaken and sponsored numerous environmental projects and had made
generous donations to the various campaigns launched over the years, living up to its reputation
as a responsible corporate citizen.
Chevron has greatly increased the level of its investment in Pakistan over the last decade. The
most recent major investment has been in the acquisition and further development of the LPG
Business of Sui Southern Gas Company limited (SSGCL) as well as acquiring 11% equity in the
White Oil Pipeline.
Chevron Pakistan is known as a responsible corporate citizen – by following the local laws and
customs and maintaining a long-standing emphasis on safety and health for its employees,
customers and other stakeholders. As an equal opportunity employer, Chevron is proud of having
women employed in key management positions across different departments. With 98% of its
employees worldwide being local nationals, Chevron is a part of the community it serves.
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LITERATURE SURVEY
ARTICLE 1:
OIL MARKETING — COMPETITION HEATS UP
Efforts being made to retain market share by offering better services
By SHABBIR H. KAZMI
Mar 26 - Apr 01
The government of Pakistan (GoP) aims at minimizing state controls and eliminating subsidies
given to local industries. The recent deregulation of Petroleum, Oil and Lubricant (POL)
products trade, is also part of its two tier policy: attracting investment in oil and gas sector and
accelerating the pace of privatization. While the shift in the GoP policy will open up the oil
marketing sector to new investment, the move is expected to intensify the competition among the
three oil marketing companies (OMCs). Deregulation of furnace oil business has rationalized its
price in the local market. While the deregulation of motor gasoline and diesel trade is expected to
put pressure on the profitability of OMCs, the policy is expected to have positive impact on the
economic revival efforts of the present government.
The oil marketing sector mainly consist of three companies namely Pakistan State Oil Company,
Shell Pakistan and Caltex Pakistan. PSO enjoys the largest market share followed by Shell and
Caltex. In the changed market scenario profitability of these companies will be directly related to
volume of sales. Therefore, all the companies are investing heavily to improve the quality of
services being offered at their outlets.
Business Climate:
POL products provide around 43 per cent of Pakistan's total energy requirements, the rest being
met by natural gas and electricity. During 1999-2000 the demand for POL products increased to
17.6 million tonnes representing 6.3 per cent growth over the previous year. The consumption
included 6.2 million tonnes of furnace oil and 5.5 million tonnes of high speed diesel (HSD) and
the balance consisted of other products. While motor gasoline demand declined by 5.6 per cent
due to substitution by CNG, HSD demand was up by over 5 per cent and furnace oil demand
increased by nearly 10 per cent due to increased consumption by IPPs, WAPDA and KESC.
Untill recently local refineries were meeting only 33 per cent of the domestic requirements and
the remaining 67 per cent demand was met through import. However, with the commencement
of Pak Arab Refinery, having a refining capacity of 4.5 million tonnes per annum, the country
has become surplus in certain products.
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The GoP has initiated measures to completely deregulate the POL trade in phases. Initially
furnace oil imports were deregulated with lifting of price controls. Motor gasoline and diesel
trade is being liberalized. Sales volume of furnace oil is expected to decline due to the GoP's
policy to encourage use of gas by the electricity producers. The high-margin lubricants business
encouraged other international companies to enter Pakistan. Over the last 12 months, companies
like Elf-Total, BP-Amoco and several smaller regional companies have entered the Pakistan
market.
Crude Oil Prices:

As the worst of winter is nearing its end and reports also indicate above average inventories,
prices of crude oil are expected to decline but remain with a certain bandwidth. OPEC has
expressed repeatedly that it would not allow crude oil prices to plunge beyound certain level.
Crude oil prices are managed through cuts in daily production quota. The GoP has also decided
to revise POL prices on quarterly basis. After a long time, prices of POL products were reduced
this month. As the international prices of crude are expected to go down further, consumers may
expect further reduction. However, the reduction will be largely depend on rupee dollar parity.
POL Transportation:
Till recently, bulk of the POL movement to up country was from Karachi — be it locally refined
or imported products. PARCO's pipeline used to handle most of the quantity and remaining was
sent through railway wagons and tank lorries. After the commencement of PARCO, this pipeline
has been dedicated for transportation of crude oil. However, a new white oil pipeline is
scheduled to come on line in 2002. As the GoP has started deregulation of POL trade, now
transportation cost will play a key role in determining the profitability of the OMCs.
Privatization of PSO:
The GoP has accelerated its efforts to privatize state-owned enterprises including PSO. It is often
said that the size of the Company— its paid-up capital and volume of business — was a hurdle in
its privatization. However, some sector analysts say that the senior management has been the
biggest opponent of PSO's privatization. They also say that profit of the Company would have
been much higher had it not suffering from extravaganza and some financial irregularities. A
new managing director, from the private sector, has been appointed recently. Under his able
leadership efforts are being made to restructure the Company and also exercise cost controls.
The current economic managers have indicated, on more than one occasions, that they plan to
off-load the GoP shareholding in various state enterprises through stock exchanges. PSO can be
a good test case. It is already listed at stock exchanges, dividend payouts are very high, daily
trading volumes are large and the scrip is quoted much above par value. Therefore, sale of atleast
10 per cent shares would be appropriate looking at the market appetite.
POL Prices:
The POL consumption is considered to have an inelastic demand. The consumption volume of
furnace oil and HSD have been increasing despite increase in their prices. However, in last
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couple of years demand for motor gasoline has witnessed declining trend in its consumption. The
lower offtake is due to gradual shift to other fuels, CNG in particular.
Historically, the GoP has been collecting a very substantial amount as development surcharge on
POL products to compensate for lower CBR-related revenue collection. While the international
lenders did not appreciate this policy, the resistance against this practice also developed to a
large extend locally. During the present military regime efforts are being made to minimize
dependence on this surcharge. Therefore, it was decided to review POL prices on quarterly basis.
The GoP has announced reduction in POL products prices this month.
OMCs are already under pressure due to the gradual deregulation of the POL trade. The latest
reduction in prices is expected to put further pressure on the earnings of OMCs. With the
reduction in POL prices, companies will face inventory losses. In the past, they were making
substantial profit due to inventory gains. However, the extent of inventory losses, in the near
future, would largely dependent on the inventory management policy of each company.
PSO may face the most adverse situation due to its higher inventory levels. The Company has
not been used to this type of situation in the past. It is also apprehended that the Company does
not have a very efficient inventory management system. Shell has been very active on this front
and has invested substantial amount in acquiring state-of-the-art inventory management system.
This system is expected to give Shell an edge over its other competitors.
In theory, one should expect an increase in motor gasoline offtake after the reduction in its
prices. In reality the increase can only be marginal keeping in view the gradual switchover to
CNG and HSD. The reduction in HSD price, by almost 17 per cent, may encourage its more use.
The reduction in transportation cost will have a positive impact on the overall profitability of
fertilizer and cement companies in particular. As a result of improvement in corporate earnings
the country may witness increase in BMR as well as fresh investment.
Dealer Margin:
The GoP has decided to increase the dealer's margin on POL products by one per cent from April
1, this year. However, the key issue is the ultimate dismantling of freight pool system, whereby
all retail outlets across the country have exactly the same prices for the products. According to a
report by KASB, "As deregulation proceeds, this method becomes onerous for the government
finances. Thus, we believe that this increase in margin is but the first step in gradually ending the
freight pool system over time. While the cost to exchequer is reportedly going to be Rs 1.5
billion because of this one per cent increase in dealers commission, the government hopes to
offset this by reduced charges on transportation at secondary distribution level which would now
be borne by the oil marketing companies."
The report further says, "The immediate impact on the end consumers is initially likely to be
neutral while in the near term the OMCs might face marginally higher distribution costs. If this
view is correct, then we feel that over the medium term there may be a potential for distribution
margins also being enhanced. That is where OMCs would certainly benefit from a bottom line
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perspective. However, it is too early to give a considered view untill some clear indication in this
regard is forthcoming from the government."
The Players:
Pakistan State Oil Company (PSO) is the largest OMC and the only national company in the
business of POL products marketing business. During the year 1999-2000 the Company sold a
total volume of 12.7 million tonnes as against 12.1 million in the previous year. The total sales
increased by 17 per cent amounting to Rs 135 billion. The Company has undertaken a number of
steps to arrest the decline in its market share over the last several years. It has launched a plan to
build New Vision outlets to provide better quality service to its customers.
At present PSO has more than 3800 outlets located throughout the country. Out of these, 150
outlets have been revamped so far and another 40 will be fully functional by the year end. At the
same time the number of company owned and operated outlets has been increasing. To motivate
and strengthen dealer network 'Million Litre Award' has been initiated. During 1999-2000 efforts
of 11 dealers were recognized through distribution of this award.
After the deregulation of furnace oil business in July 2000, PSO was the first OMC to invite
international bids for import of the product. A total of 1.9 million tonnes furnace oil was
imported by the Company during July-October period. The Company maintained uninterrupted
supplies insipite of huge demand by WAPDA, due to lower hydel power generation and
explosion at Kuwait Petroleum Company refinery. PSO has signed a long-term product off-take
agreement with PARCO. The Board of Directors has approved the acquisition of 12 per cent
(approximately Rs 950 million) in Karachi-Mehmood Kot 864 kilometer long white oil pipeline
project, which is scheduled to be completed by December 2002.
SALES VOLUME
(Million tonnes)
Year Quantity
1996 11.6
1997 11.9
1998 12.7
1999 12.1
2000 12.7
REVENUES
(Rs in billions)
Year Quantity
. 81
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1997 110
1998 121
1999 116
2000 135
Shell Pakistan is not only the second largest company, enjoying 32% of the market share, but it
also offers superior quality services to its customers. To further improve its services, it has been
developing a network of Company-operated sites. Whilst contributing to the bottom line, these
serves as models of excellence for dealer-operated outlets and are also used for testing market
initiatives. Another customer service, the 'Shell Genie' fast and free oil change facility has been
extended to more outlets. This has helped the company in increasing its lubricants sale. A site in
Rawalpindi has set a new world record by carrying out 1,678 oil changes in a single day. Its
Lube Oil Blending plant is ISO-9000 certified ensuring continued supply of highest quality
products. The Company has also initiated agency business for a new range of gear oils for
commercial transport customers.
Shell has also initiated Business Process Re-engineering project — CHIPS. This project is
planned for completion within this year. This name reflects the key themes: Change, Integrate
and Profit. The Company envisages to achieve revolutionary change in the way people work; by
harnessing new technology to streamline business processes and focus on customers. The
Company plans to link over 30 locations via a new satellite-based telecommunication network
providing up-to-date information on details such as customer orders, delivery status and stock
levels. Another milestone in IT infrastructure include the connectivity of Shell House to all its
major outlets in Karachi over a fully backed up 'Line of Sight Radio' communication network.
The network is constructed in such a way that communication to Shell House can never be
disrupted. An advance Remote Access System has been installed to provide 24 hour on-line
access to Shell House. This has allowed access to the Head Office network by all remote users.
In 1993 The Royal Dutch Shell Group acquired a controlling interest in Shell Pakistan and, since
then, profits have improved substantially. Profits are not only used to pay dividend and taxes, the
amounts are also reinvested. Over the last seven years more than Rs 5 billion have been spent on
building new and improving existing assets. Out of this the most visible investments are in
branded service stations and tank lorries. Upto June 30, 2000, the total number of such outlets
was 386.
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SALES VOLUME
(Million tonnes)
Year Quantity
1996 3.0
1997 2.9
1998 3.2
1999 3.5
2000 3.7
REVENUE
(Rs in billions)
Year Amount
1996 27
1997 38
1998 43
1999 50
2000 62
Caltex Pakistan has a smaller market share as compared to other two giants. To combat the
onslaught of the process of deregulation, the Company has formed an alliance with Shell for
import and handling of gasoline and HSD. However, the Company is not expected to witness any
substantial gain in its market share due to a constrain of limited number of outlets.
Attock Oil Refinery acquired the permission to establish its own outlets some years ago. It had
the plan to establish these outlets in the northern region. It is expected that after the increase in
its refining capacity the Company would start establishing its own outlets.
Pak Arab Refinery has formed strategic alliance with some of the world leaders for marketing
of its products. Since it has a very large refining capacity and some of the products being
produced are in surplus, it has two options: export the surplus or establish its own outlets.
Raising money to establish the outlets should not be a problem. However, sector analysts
believe, that its top priority is establishing the white oil pipeline which is scheduled to come on
line in 2002.
Outlook
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The GoP must undertake speedy privatization of PSO. In the mean time at least 10 per cent of
the shares owned by the GoP should be off-loaded through stock exchanges. Sale of PSO shares
will not only enable the GoP to raise substantial money but will also help in convincing investors
that it is serious in privatizing state enterprises. There seems to be no hurdle except lack of will
on the part of the GoP.
The OMCs will experience a decline in their margins. Sales volume will play a key role in the
profitability of the companies. The companies already face a severe competition. In future, two
factors will determine the profitability of the OMCs. These are: volume being handled and
inventory management system. Prudent inventory management system is will play a key role as
further reduction in POL prices is expected.The reduction in POL prices will have a positive
impact on the economy in general and fertilizer and cement sector in particular. Most of the
domestic industries will experience a relatively more favourable cost base. This alongwith
expectations of improving economic growth may improve the overall corporate earnings.
ARTICLE 2:
PSO sale may trigger race for region’s oil
-------------------------------------------------------------------
Muhammad Aslam
Who will be the successful bidder after the government offers the controlling shares of Pakistan
State Oil for sale to the private sector under its privatization programmed sometime in June?
This is being debated in oil circles but there is no ready answer as it could well be one of the
toughest corporate fights among the world oil giants ever witnessed in this part of the world.
No prospective world investor having resource and back-up facilities would like to give a virtual
walkover to his rival in the bidding for a blue chip share such as PSO. Holding a market share of
75 per cent in the retail petroleum products distribution network, an annual sales volume of Rs
82 billion, assets of Rs 16 billion and above all, a market leader in more ways than one, the PSO
is certainly attractive investment bait.
World oil market leaders, notably Mobil Corporation, Shell Pakistan and British Petroleum (BP)
are said to have already taken positions with a vow to fight to the last as the bait has many cross-
border ramifications for the winner. There are three contenders for the PSO bid while others oil
giants may join the race later.
Privatization of PSO has relevance for those who have already a big stake in the Central Asian
oil business both retail and exploration as it could well provide the missing link for the retail
business here. And this factor, including the proximity of the possible source of supply, put the
Mobil Corporation on the top of prospective buyers of PSO.
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After having bought a lubricant plant here, Mobil Corporation will enter the retail oil business
possibly by the next month. Sitting in Islamabad its country manager could be instructed to join
the race for the PSO shares. Data on the subject is already being collected by the bidders
There are no resources or any other technical problems for the three possible bidders as none
could beat the other on these counts, said an oil expert adding the Mobil could have an edge over
others for more than one reasons including its strong oil base in the Central Asian countries.
Shell (Pakistan), an equally resourceful contender, already holding 20 per cent of the retail oil
market share here, or Rs 30 billion annual turnovers might have an obvious bidding
disadvantage.
Under policy guidelines laid for the essential commodities, the government is bound to
discourage any sort of monopoly and opt for an open market competition policy to ensure fair
prices for the consumers. Caltex might not have much of a say in the retail market because of its
modest five per cent market share if Shell wins the PSO bid. The bosses of Shell Pakistan if they
really intend to protect their retail business here into the 21st century will have to seek refuge in
same fool-proof device compatible to the magnitude of Pakistan’s new century unfolding oil
scenario. But owing to its contribution in restoring customer confidence in the quality of
products and new customer-related concepts including Retails VISUAL Identity (RVI) qualify
Shell Pakistan to be one bonafide bidder.
British Petroleum (BP) after the recent visit of its president is also very much in the battle arena
but is still to show its cards. Whether it will opt for oil exploration, chances for which are not
that bright or the retail business is not clear but it surely could be one of the PSO stake bidders.
Caltex Corporation Pakistan appears to be not that enthusiastic about the PSO battle as its high-
ups seem to be more than satisfied with their market share of 5 percent in the retail business.
Having strong presence in the gulf and the South Asian region, the big question is this: why
Caltex is a reluctant retailer in an expanding market, with a growth rate of 10 per cent, many may
well ask. But Caltex people like to work in low- key.
However, its groups recently launched corporate identity campaign focusing on building value
for customers through improved services has shown astounding success in the Gulf.
Corporate identity:
The launch of the new identity the world over has changed the old one. Let us see how Caltex
does business after the sale offer of the PSO share. It might also be one of the bidders to protect
its interests. There are fear in some quarters that foreign oil giants could form a cartel to
manipulate POL prices at the retail level after the privatisation of PSO, the only counter-
balancing force and it is essential that three should be more than one retailers working under the
free market economy system.
But oil analysts allay these fears. Shell, Mobil, BP, Caltex and some others have stakes in all the
countries but are engaged in healthy competition to pass on the benefits of world price decline to
billion of their consumers.
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However, the question may well he asked why the government should privatise an enormously
viable and profitable corporate entity at all. Successive former governments, owe PSO too much
as in difficult periods it has lined up funds from foreign markets, on the strength of its credit
worthiness to fill in official resource gaps. Ruling at Rs 270 for a 10-rupee share (Peak at Rs
425), with a good dividend record and reciepient of Corporate Excellence awards for successive
years, PSO could be an envy of any investor. But the government needs money under its recently
launched National Debt Retirement Programme and might not have some rethinking on the issue.
Official Refuge:
Many oil analyst say PSO has its own identity in addition to playing the role of an official refuge
and should not be bracketed with the six units and other utilities such as Sui Southern Gas and
Sui Northan gas.
There is a difference between the losing and earning companies. The debt of 30 million dollars is
too big an amount to be repaid through the sale of national assets.
Irrespective of an academic discussion on the issue, the government is not inclined to look back
and is expected to go ahead with its privatisation plan and after June PSO might have a new
management.
Who it could be is too early to say after winning the biggest financial battles in the corporate
history of Pakistan. Shell, BP, Caltex and Mobil all have are equal chance.
But after the delayed deregulation of retail distribution network by July 1998, the oil business for
customers might not taste the same as during the last five decades.
ARTICLE 3:
FROM BUSINESS RECORDER
Hedging of oil price risk
SHAHID SCHEIK
(April 09 2007)
In an age of soaring oil prices, hedging has become a crucial part of business for the most
successful companies, whether in the oil value chain, where the existence of hedging strategies
adds significantly to a company's value, or in oil or gas consuming companies such as fertilisers,
airlines, shipping, power generation, railways, etc.
WHAT IS HEDGING?
The most important thing to bear in mind is that the principal goal of hedging is not to make
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money but to protect from losses. While the number and variety of hedging possibilities is
practically limitless, whatever the strategy, the common denominator is that hedgers willingly
give up the opportunity to benefit from favourable price changes in order to achieve protection
against unfavourable price changes.
The two primary instruments used to hedge are: Futures and Options. Hedging with Futures -
when you sell a commodity in advance to lock in a price and, in exchange, give up the
opportunity to make more money if prices rise. This is achieved either through active or passive
hedging.
Passive hedging is used by highly risk-averse companies that would like to be completely certain
of their future cash flows through hedging of their entire risk exposures. This is done by locking
a specific price either through (i) long term contracts between supplier and buyer, or (ii) through
a derivatives contract such as futures, forward or swaps, available on most leading commodity
exchanges or (iii) as over-the-counter (OTC) bilateral contracts.
Active hedging is an approach by which a company seeks to achieve a balance between hedging
risk and the cost of hedging by hedging only part of its overall exposure either through a long
term contract or a derivative instrument, and keeping the remainder of the exposure un-hedged
so as to benefit from favourable market movements, either through exercise of Options or deals
in the Spot market.
Hedging with Options - Companies can include the benefits of price changes in hedge contracts
by resorting to Option contracts, which allow them to either buy or sell in the spot market
without necessarily being committed to the hedge contract. But such a method imposes a heavy
hedging cost in the form of Option Premium, which has to be paid up front at the time of
hedging.
WHY HEDGE OIL?
Crude oil prices have become more volatile than the prices of other commodities Standard
deviation of monthly percentage changes.
In the industrial age, oil price risk is of course extremely important to all those involved in the oil
industry: producers, refiners and end users. The volatility of crude oil prices has a significant
impact on the planning decisions, budgets and cash flows of producing and consuming
companies.
The nature of risk exposure of an organization to fluctuations in oil prices depends considerably
on its position in the oil value chain. For instance, an E&P company is perennially exposed to the
risk of any decrease in the oil prices. By contrast an oil refining company would be largely
concerned about protecting the spread between crude oil and refined products (motor spirit,
diesel, naphtha, etc); and oil marketing company would be concerned about the variation in the
retail margin, i.e. the difference between import or ex refinery price and the sale price to
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customer or consumer.
Considering the extensive reliance on budgetary revenue from oil products and the trickle-down
effect of oil prices on national economies, price risk management of oil is a critical requirement
for governments, particularly in import-dependent, energy-deficient countries. Therefore it
makes sense for public sector stakeholders to develop some sort of hedging program to insure
that they are protected against a collapse or a run up in oil prices.
While companies are of course free to choose hedging with options to make money, entities such
as public utilities or governments should refrain from hedging as a source of extra profits.
Rather, their policymakers should only look upon hedging as a means to stay within budget
forecasts, to ensure certainty of cash flow and, by stabilizing energy prices, protect the economy
from shocks.
HEDGING VS SPECULATION:
It is important to distinguish between hedging and hedge funds. While corporations and
governments hedge to reduce volatility, the Exchanges that make hedging possible also
accommodate speculators who use the same instruments in an effort to make money.
Hedge funds, or speculative commodity pools, are made up of institutional investors or groups of
investors that shift large sums of "hot money" between different markets at the first sign of a
possible higher rate of return elsewhere.
In this sense, the term "speculators" usually refers to investors who trade oil futures with a view
to profiting from the rise or fall of prices; they have no exposure to the physical oil commodity.
By contrast, hedgers have sizeable spot or forward market commitments and trade futures
contracts in order to minimise their exposure to price fluctuations. There is almost always an
underlying physical contract behind a hedging trade.
A country's ability to cope with prolonged high oil prices is said to depend on four key factors -
how economically (and politically) resilient it is to start with, how dependent upon oil imports,
how intensively it uses energy, and how heavily it subsidises fuel prices.
In a recent Australian survey of the region, on a scale of 0-7 (zero being best) Pakistan scored 6
for its ability to cope with oil price risk. By way of comparison, Taiwan scored 1, China 2,
Malaysia 2, India 3, Vietnam 5, Indonesia 5, Sri Lanka 5, Bangladesh 6, and Myanmar and
Nepal 7 each.
Oil price volatility in 2006 has hit hard some of Pakistan's best known corporations, plunging
several into loss and wiping out the profitability of others. The most publicized example is that
of PIA, which saw its fuel bill rise by Rs 17 billion, and which would have turned a profit of Rs
3.5 billion if it had ensured stability in its oil purchase prices.
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In the Oil sector, the gross profits of PSO and SHELL declined by 50%, the loss of income
being caused principally by imports of HSD and Furnace Oil that were un-hedged against
adverse price risk. By contrast, Attock Petroleum, which does not carry import price risk,
reported an increase of 28% in its GP for the same period.
The four listed Refineries made a loss of Rs 0.5 Billion in H1 2007-08 compared to a profit of Rs
2.9 billion the corresponding year-ago period due to higher input prices of crude oil.
The woes of KESC and WAPDA due to high Furnace Oil prices and the cost to government for
subsidizing these entities are all well documented. Not so well-documented is the cost to
companies such as PNSC and Air Blue, both major purchasers of oil products or budget
dislocations to public sector entities such as Pakistan Railways and the Defence services, but
these can be estimated to be substantial.
The prognosis for 2007 is not encouraging. Furnace Oil imports are expected to increase by 80%
in FY 2007-08, due to demand from electricity generating companies and industrial consumers
facing shortage of natural gas supplies.
PLANNING FOR THE FUTURE:
Pakistan's oil imports, which are projected at USD7.5 billion for FY 2007-08, are not expected to
decline in monetary terms, even if oil prices move down, because of the annual 12% growth rate
in energy demand.
If the on-going LNG, piped gas and electricity imports plans do mature into fruition, the
country's level of risk to oil and energy price volatility will rise correspondingly.
This suggests a need for (i) capacity-building in hedging among the oil industry, oil-consuming
corporations in the public and private sector, financial sector companies and regulatory agencies;
and (ii) development of a framework by which hedging of energy (oil, gas, electricity) can be
regulated.
The losses already suffered and the possibility of further losses, in view of the known geo-
political factors influencing oil and energy price stability, indicate there is little reason for
stakeholders to procrastinate.
Hedging is not a new frontier. It is a financial instrument that is already widely used and
practised internationally and regionally. Like any other risk mitigation instrument, hedging has
its upside and downside, the latter countered through professional competence, knowledge of the
overall market and the complexities of the transactions, and proper regulation and reporting of
hedge trades.
Policy-makers in Pakistan do, however, have the benefit of creating a proper regulatory
environment by studying and avoiding the mistakes made by other countries during their
learning curve.
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For companies and government faced with possible billions of rupees losses or subsidies, it is the
need of the hour to understand and use to advantage hedging of oil prices for mitigating the risk
to the financial health of their charges.
ARTICLE 4:
PSO posts all time high profit
RECORDER REPORT
KARACHI (February 16 2008)
Pakistan State Oil Company Limited, the largest state owned oil marketing company in the
country has achieved a historic milestone with gaining all time high profit before tax of Rs 8.2
billion and profit after tax of Rs 5.5 billion in the first half of financial year 2007-08. This was
achieved owing to 13 percent higher sales volume as well as due to inventory gains during the
period.
The Board of Management of the company, in its meeting held here on Friday declared second
interim cash dividend for the financial year ending June 30, 2008 at the rate of Rs 6 per share ie
60 percent. This is in addition to first interim dividend already declared at Rs 5.00 per share ie 50
percent.
Sardar M Yasin Malik, BoM Chairman, presided over the meeting. According to the financial
results, PSO's profit for the period surged to Rs 5,487.962 million in the six-month period ended
December 31, 2007 as compared to Rs 1,136,739 million earned in the corresponding period last
year.
The company's earning per share increased to Rs 32.00 in the period under review against Rs
6.62 per share in the same period a year back. The company in its announcement said that
despite intense domestic competition PSO was able to sell over 6.2 million tons of POL
products, showing a 13 percent growth and translating into an all time high sales turnover of Rs
248 billion - an increase of 25 percent over prior year.
The all time high profit before tax of Rs 8.2 billion and profit after tax of Rs 5.5 billion was
achieved owing to 13 percent higher sales volume as well as due to inventory gains during the
period. PSO has approximately 80 percent of the country's storage capacity and has recorded
gain or loss on its stock depending upon international oil price movement. Last year the company
had an inventory loss during the same period.
Based on the improved performance, the Board of Management announced the second interim
cash dividend of Rs 6 per share, in addition to the first interim dividend of Rs 5 per share
translating into a cash payout of Rs 1.9 billion to its shareholders, which is Rs 5 per share more
than the prior year period.
During the first half of FY08, international crude oil prices averaged over $78/bbl as against
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$61/bbl in 1HFY07. The trend of increase in crude price witnessed in the first quarter of FY08
continued during the second quarter, with Opec basket price peaking at $92/bbl during the first
half as compared to $73/bbl during the same period last year.
Throughout the first half the company continued to face liquidity problems due to ever-
increasing receivables from the government resulting in galloping financial cost. Despite the
rising international prices, government continued to provide the subsidy in diesel, which touched
its highest ever level at Rs 17.14 per litre in December 2007. At this level of subsidy the sale
price of diesel would have been Rs 54.87 per litre vs current price of Rs 37.73 in the market.
The subsidy accumulation on account of Price Differential Claims (PDC) reached a level of Rs
26 billion at the end of November, however, a reimbursement of Rs 12 billion was received
through financing arrangement with a syndicate of banks, thus mitigating the cash flow crunch to
some extent. The company is pursuing another similar arrangement to address the increasing
PDC receivable.
Following a 13 percent growth in sales volume PSO was able to enhance its overall market share
to approximately 70 percent compared to 67.4 percent in the same period last year. The company
outperformed its competitors by recording 14 percent increase in White Oil sales volume against
industry growth of 10 percent, whereas Black Oil sales increased by 11 percent versus a single
digit industry growth of 6 percent.
Consequently, the company improved its market share in Motor Gasoline from 46.3 percent to
50.1 percent, while High Speed Diesel market share increased to 62.9 percent. Similarly, Jet A-i
market share increased to 63.6 percent vs 62.8 percent in the same period last year. In fuel oil,
the company maintained its leadership with 81.5 percent market share.
PSO has been maintaining strong focus on enhancement of Non-fuel retail business. Accordingly
ATMs were installed in collaboration with leading banks at selected retail outlets. The company
also established food outlet as part of its Quick Service Restaurant (QSR) network plan in
collaboration with a foreign fast food chain at one of its retail outlet, which is the first
internationally recognised Quick Service Restaurant (QSR) established at any OMC's forecourt
in Pakistan. PSO customers can now experience state-of-the-art car cleaning solution 'Wash
Express' which has been introduced at selected outlets.
In order to maintain its leadership position in aviation industry, PSO developed exclusive
aviation, consumer and retail facilities at the newly developed Sialkot International Airport
(SIAL) inaugurated by the President of Pakistan in December 2007. PSO's refuelling facility at
SIAL is fully capable of providing services to larger body aircraft as per international Aviation
Quality Control & Safety Standards.
The Pakistan Credit Rating Agency (Pacra) assigned your company a long-term and short-term
entity ratings of 'AAA' and A1+ which is the highest credit ratings in Pacra's rating scale.
During the period under review, PSO also won the Pakistan Society of Human Resource
Management (PSHRM) Most Preferred Local Company Award thus moving towards becoming
the 'Employer of Choice.' The company also won ICAP-ICMAP 'Best Corporate Report Award
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2006 in Fuel and Energy sector. The Board expressed its confidence that the management
remains well poised to meet anticipated market challenges and continue to deliver improved
performance.
ARTICLE 5
Understanding the Petroleum Scam in Pakistan
by Dr Farrukh Saleem
Published in The News on January 27 2008
In May 2006, the international price of oil hovered around $66 per barrel (OPEC Basket). On
January 2, oil in New York was traded at $100 per barrel (NYMEX) while OPEC Basket was
quoted at around $90 per barrel (remember, in January 1999, oil had hit a low of $11 per barrel).
Yes, in May 2006 the price of diesel in Pakistan was Rs37.18 per litre. Yes, Shell Pakistan is still
selling diesel at Rs37.73 per litre. In effect, the price of oil in the international market has gone
up by a whopping 40 per cent but the government of Pakistan is providing diesel to Pakistanis at
rates lower than the international market (India hasn’t increased the price of petrol and diesel in
18 months).
We all know that our government has absolutely no control over the international price of oil.
What we must also recognize is that Pakistan’s oil industry is a cartel and the best thing that a
cartel does is rip off consumers. Our oil cartel essentially has nine major members and 169
million consumers to be ripped off. Our oil industry is oligopolistic in nature; from Greek ‘few
seller’, many buyers and an inelastic demand (quantity of oil demanded by consumers changes
little with a price increase).
Here are the nine major members of the oil cartel: Pakistan State Oil (PSO), Pak-Arab Refinery
(PARCO), Attock Refinery Limited (ARL), Attock Petroleum, National Refinery Limited
(NRL), Pakistan Refinery (PRL), Chevron/Caltex, Shell Pakistan and Total-PARCO. They own
each other, they sit on each others’ boards and they own projects jointly. ARL, Attock Petreleum
and NRL are all owned by the Attock Group. PSO, Shell and Caltex own PRL jointly. The
government of Pakistan owns 60 per cent of PARCO while Total and PARCO are partners.
Here’s how 169 million consumers are being ripped off:
One, no refinery in Pakistan is technically capable of producing 0.5 per cent sulphur diesel
(emission control standards in Europe and North America now require refineries to produce ultra
low sulphur diesel). All that our refineries produce is 1 per cent sulphur diesel. In essence,
Pakistani consumers are being supplied an inferior quality product at the price of a superior
product. The average differential in price–between 0.5 per cent sulphur diesel and 1 per cent
sulphur diesel–is $18 per ton. Pakistani consumers are being ripped off a hefty Rs4 billion a year.
Two, in November 1999, the freight component on a litre of diesel fuel stood at Rs0.65. In
December 2004, ‘Inland Freight’ on HOBC amounted to a scandalous Rs12.24 a litre. Someone
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is making truckloads of money because transporting a litre of gasoline should not be costing
more than Rs0.30.
Three, in July 2002, the government of Pakistan allowed refineries to impose a 5 to 10 per cent
‘deemed duty’ in order to create a special reserve for the purpose of upgrading. The refineries
have sucked up Rs18 billion from Pakistani consumers but not a rupee has been spent on up-
gradation.
Four, since 2001, the government of Pakistan has been collecting an average of Rs40 billion to
Rs50 billion a year in the form of ‘Petroleum Development Levy’ to be used for the stabilization
of prices in future years. That reserve should have crossed Rs200 billion (the levy was ended in
2005). Can anyone please tell me where that reserve is?
Five, refining margins charged by Pakistani refineries are, in some cases, twice as high as being
charged by refineries outside Pakistan. The cartel has served its members well. Look at who is
making millions if not billions: PARCO made Rs1.2 billion in 2000-01 and now makes in excess
of Rs10 billion. NRL has gone from a meagre Rs23 million in 2000-01 to Rs4 billion. ARL has
gone from making Rs29 million in 2000-01 to Rs1.7 billion.
Yes, Pakistan’s oil cartel is now demanding from the government a colossal Rs49 billion as
‘Price Differential Claim’. Yes, Pakistani consumers would have to pay more because the
international price has gone up. But, governments around the world support consumers, not
cartels. We are special. Governments around the world break cartels. We are special.
Consumer Protection or Brand Courtesy: Case of the Oil & Gas Retail - Part 1
Stop at any of the 99.9% CNG filling stations of PSO, Shell, Caltex, Attock Oil in Pakistan and
you will get robbed of your hard earned money…well voluntarily though! Yes thats what you do
to yourself when you do not get the worth of CNG that you actually pay for. Here is how.
Majority of the CNG dispensing machines installed at the CNG stations through out Pakistan do
not have automatic meters to give the motorists “exact fill for their bill” (could actually be the
name of an awareness campaign). Every time a motorist drives into a CNG filling stations they
end up paying atleast 50 paisas/cents more than the dispensed amount of gas. The station
attendants manually stop the dispenser and despite doing it for years and years it is amazing that
they have not mastered the art of stopping the dispenser at the exact reading (or atleast very
close).
In monetary terms this means accumulation of un-accounted earnings amounting to millions for
hi-frequency stations, evey month! Where are the regulatory bodies, civic societies and the
consumer sense?
The solution is simple and so is the reason behind this malpractice. All that needs to be done is to
install these manual CNG machines with modular meters that would do the job. The reason for
not doing is our “ignorance” (for the illiterate) and withering “self-disrespect” (for the learned?!)
that we accept being robbed every day of our lives. Its so funny since we have set a monetray
limit for being robbed i.e. in cents.
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PROBLEM DEFINITION
A problem can be simply defined as an interest in an issue where finding the right answers might
help to improve an existing situation. Thus it is fruitful to define a problem as any situation
where a gap exists between the existing and the desired ideal states. So, in our research problem
statement is “COMPARATIVE ANALYSIS OF OIL MARKETING COMPANIES IN
PAKISTAN”.
IDENTIFICATION OF VARIABLES
A variable is any thing that can on differing or varying values. Following are the types of
variable that we identified in our research:
1. Dependent variable.
2. Independent variable
3. Moderating variable
4. Intervening variable
DEPENDENT VARIABLE:
Dependent variable is the variable of primary interest to the researcher. In other words it is the
main variable that lends itself for investigation as a viable factor. In this research report
dependent variable is “Comparative analyses of Oil companies in Karachi are equal”. Our
whole research is moving on the basis of this variable.
INDEPENDENT VARIABLE:
An independent variable is one that influences the dependent variable in either a positive or
negative way. With each unit of increase in independent variable, there is an increase or decrease
in dependent variable also. So in our research “Facilities of PSO” is the independent variable.
These factors influence the dependent variable either in a positive way or in a negative way
depending on situation. So independent variables are:
• Better fuel quality.
• PSO has more number of petrol stations and hence has convenience of location.
• PSO cards:
 Prepaid cards.
 Fleet cards.
 Corporate cards.
 Loyalty cards.
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 Privilege Loyalty Cards.
MODERATING VARIABLE:
Moderating variable is one that has a strong contingent effect on the independent variable-
dependent variable relationship. “Better customer services provided by PSO” is the moderating
variable in our research. It is due to because people mainly see performance but if services
provide are also very good then obviously it has a strong contingent effect on decision.
So moderating variables are the customer services such as:

• Oil change.
• Air/Tire Facility.
• Drinking Water.
• Convenience Stores.
• Toilets.
• CNG.
• Workshops.
• Car Wash.
INTERVENING VARIABLE:
An intervening variable is one that surfaces between the time the independent variables start
operating to influence the dependent variable and the time their impact is felt on it.
In this case, intervening variables can be:
• Other fuel companies providing better services
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DEVELOPMENT OF HYPOTHESES
The tests of Hypothesis are used to test the validity of a claim about the value of population
parameter. A statistical hypothesis is a quantitative statement about a population or simply a
statement that something is true. It is an assertion or conjecture concerning one or more
populations. The hypothesis which we want to test is called the Null hypothesis and is denoted
by Ho. Any other hypothesis which is taken against the null hypothesis is called the Alternative
hypothesis and is denoted by Hi.
Chi Square Goodness of Fit Test
Step-1: State the Null & Alternative Hypothesis.
i. NULL HYPOTHESIS:
“Comparative analyses of Oil companies in Karachi are equal” is our Null Hypothesis.
ii. ALTERNATE HYPOTHESIS:
“Comparative analyses of Oil companies in Karachi are not equal” is our Alternate
Hypothesis.
Step-2: Level of Significance:
In hypothesis test we call Alpha ( α )as “Significance level”, and if it is not specified then
always set to 0.05. In this case α is divided equally into Two Tails,
Hence, α/2 = 0.05/2 = 0.025
With Degree of Freedom i.e. k – 1 (where k is the number of categories) = 4 – 1 = 3
Step-3: Calculate the Critical value.
Then, from Chi-Square Distribution Table

Critical Value = (0.025, 3) = 9.348
For this situation n=100 and k=4 then the Expected frequencies for the four categories are equal
and are given by: 100/4 = 25
Step-4: Compute the Test Statistics
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Test Statistics( χ ) = ∑ [(o – e) ^ 2/ e]
χ = 34.560
Chi Square Testing
COMPANY’s OBSERVED EXPECTED (o-e) (o-e)^2 (o-e)^2 / e

(o) (e)
PSO 45 25 20 400 16
SHELL 33 25 8 64 2.560
CALTEX 13 25 -12 144 5.760
OTHER 9 25 -16 256 10.24
Total 100 864 ∑=34.560
CURVE:
Critical Region
9.348 34.56
RESULT:
The calculated value of Test Statistic is compared with the Critical Value.
Since 34.56 > 9.348
Hence, the Null Hypothesis is rejected and Alternate Hypothesis is accepted,
i.e.: Comparative analyses of Oil companies in Karachi are not equal.
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RESEARCH DESIGN
Research design is a step by step process. It provides the basis for testimony. The need of the
research itself determines the methodology and the design of the research.
Detail of study includes:
Purpose of the study

Types of investigation
Extent of researcher interference
Study setting
Unit of analysis
Time horizon
PURPOSE OF THE STUDY:

Our purpose of study is “Hypothesis testing” because in this research we test our hypothetical
statement which we developed in previous step.
TYPES OF INVESTIGATION:
Our type of investigation is “co relational” because we find the important variables or factors
that contribute their part in providing an edge to the most preferable oil company.
STUDY SETTING:
Nature of our research is of “non contrived” because we do our research in natural environment
and not in Artificial environment that is not in labs.
UNIT OF ANALYSIS:
In our research unit of analysis is “group” because in this research, questioner are fill by a group
of people who avail the services of petrol pumps. We collect the data from this specific
group who are vehicle owners.
TIME HORIZON:
Our study is “one-shot” or “cross-sectional studies” because in this research data are gathered
just once in order to answer research questions.
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QUESTIONNAIRE ANALYSIS
No. Of questionnaire filled = 100
No. Of error free copies = 100
Percentage of response rate = 100%
The Need for Information:
The management at PSO is involved in developing strategies that will help in meeting
customers’ needs in a more efficient and profitable manner. The increased competition renders it
important to identify what the customer needs. This provides an opportunity to serve the
customers better if we know what the customers want. PSO has always placed great emphasis on
identifying new approaches for satisfying the customers to attract more and more customers to
the petrol pumps on one hand, and on the other hand, to form long-term relationship with the
PSO company.
In the highly competitive world of today, the quality of service provided to customers determine
whether the company would be able to retain these customers or not. The aim, therefore, is to
understand and anticipate what the customers look for, when they come to a petrol pump. In case
the service level and facilities that are highly valued by the customers are provided inefficiently,
PSO needs to identify these areas and improve its performance there. In case the customers are
not getting the desired service level, there is an opportunity regarding what needs to be done to
provide the customers with need satisfying products and services.
S A M P L I N G D E S I G N
To conduct the report it is important to identify the population, samples, elements. and other
sampling items that will be part of the research
Element and units:
The element and unit size would be consumer that visit petrol stations
Extent:
Karachi was selected as the city where research would be considered.

Time:
Research would be conducted during the period of April - May 2008.
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Population:
The population would comprise of all consumers of petrol in the country.
Sample Size:
Due to the time consideration a sample size of 100 customers is considered. Although the
sample size is small however this will also result in less non-response error.
Research Procedure:
A non-probability sampling method is being carried in the report. Both judgmental and
convenience procedures will be used.
The company specified the areas and the petrol pumps where the research needs to be
carried and it was up to my choice to select the respondent for the filling of the questionnaire.
MEASURMENT INSTRUMENT
A questionnaire has been prepared which will be filled by the samples selected for customers
residing in Karachi
The data collection instrument used to collect the primary data is a structured questionnaire with
open and close-ended questions. Using questionnaires for gathering information allows the level
of flexibility required for this research. This has been done to collect accurate information with
the help of questions, which are relevant in the circumstances.
The questionnaires in most cases will be self-administered, which means that the interviewer
himself will ask the questions rather than giving the questionnaire to the respondent to fill out.
The reason for this approach is that in asking questions form the customers guaranteed that
responses to all the questions was recorded and in case there was a problem in interpreting the
question by the customer, the question was clarified by the interviewer before answering the
question.
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T Y P E O F Q U E S T I O N S
The questionnaire consists of 10 questions. These questions are aimed at gathering customer
responses on factors, which are under discussion and are aimed at achieving objectives.
As it’s a general knowledge that city customers have less time to respond to the questions
because the normal time taken to fuel a car is 3 - 5 minutes. Visits to petrol stations are
considered a chore therefore most people are normally in no mood to answer questions. Similarly
people at central locations cannot spare more than a minute or two to answer questions since they
are rushed or are in a hurry to reach someplace. The questionnaire therefore had to be
administered during this time period.
For this reason, the length of the questionnaire and the combination of questions are adjusted
keeping in mind the time constraint. Therefore, most questions were closed-ended, signifying the
importance of getting to the point and accurate answers
M E A S U R E M E N T T E C H N I Q U E
The measurement techniques that are being used in this research survey are questionnaires and
attitude scales that helped us in eliciting reports of the consumer perceptions and preferences
about different automobiles that were selected for this particular report. For this reason, a
questionnaire was prepared with the help of rating and composite scales that helped us in
gathering information regarding the degree of importance and the value individuals assign to
different attributes.
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ANALYSIS AND INTERPRETATION OF QUESTION
QUESTION NUMBER1
ON AN AVERAGE HOW MANY TIMES DO YOU VISIT A PETROL
STATION ?
PURPOSE OF QUESTION:
The question was developed keeping in mind that the first question of an effective questionnaire
should be neutral in order to prevent the respondent from becoming conscious towards or against
any factor which might positively or negatively influence him to give inaccurate responses to the
other questions in the questionnaire. The question will help us in knowing the usage rate and the
frequency with which our respondents on average visit a petrol station.
FINDINGS
Total No. of Respondents 100 %
Daily 47 47%
Twice a week 21 21%
Thrice a week 19 19%
Other 13 15%
Once a week 9 9%
After 2weeks 4 4%
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QUESTION NUMBER: 2
WHICH PETROL STATION DO YOU GENERALLY VISIT?
The aim of this question was to measure what sorts of preferences are held by the customers
regarding the different petrol pumps. Seven answer choices were provided as a response to the
question. The choices were as follows:
 SHELL
 CALTEX
 PSO
 Other ________
This question aimed at understanding the degree of brand recognition as well. In case the trend
shows that customers go to other pumps and are able to name them would help us determine the
customer share of mind regarding PSO as a company as well as the brand loyalty towards PSO
in comparison to it’s competitors. It is important to gauge the extent of customer loyalty towards
PSO in comparison to it’s competitors because the current level of competition makes it
imperative to identify the weak areas where PSO needs to improve in order to improve the
picture of overall customer loyalty towards PSO.
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DATA ANALYSIS APPROACH

The data obtained from this question has been analysed on the basis of customer preference
percentages.
PETROL STATION n = 100 %

PSO 45 45%
Shell 33 33%
Caltex 13 13%
Other 9 9%
The findings are being presented in graphic form for better comprehension and analysis of data
obtained through this question.
The above analysis show a lack of brand loyalty towards Caltex and Shell petrol pumps.
However a significant number of respondents prefer both PSO and Shell petrol pumps. PSO
must come up with strategies which will result in maintaining its loyal customers and in
enhancing customers that go to shell and Caltex. .
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QUESTION NUMBER: 3
WHY DO YOU VISIT YOUR PREFFERED PETROL
STATION?
The third question was aimed at determining what are the main reasons, which attract the
customers towards PSO. Two specific forms of information were generated as a result of data
collected from this question. The main reason for asking this question was to help identify the
main factors, which play the most important role in customer’s decision to come to PSO or any
other petrol pump.
The answer options were as follows:

 BETTER FUEL QUALITY
 CONVENIENCE OF LOCATION
 BETTER SERVICE
 AVAILABILITY OF CREDIT FACILITY
 RELATIONSHIPS / PERKS ETC.
 URGENCY RATHER THAN PREFERENCE
These options helped in pin pointing the main benefits that customers perceive they get when
they come to PSO. These would be the strong points and strengths of PSO as compared to the
competitors. In case PSO scores low on any of the factor will help us identify the areas where the
attractiveness of PSO is low.
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This question was primarily designed to get an insight into the customer orientation and
perception of customers towards PSO, that is how the customers perceive PSO to be, what they
believe PSO offers them in comparison to what they get form the competitors.

The data obtained from the sample has been analyzed on the basis of
a) Those customers who rank only one feature as the most important factor that attracts them
towards PSO, those who look for a particular aspect while determining their preference
choices.
b) Those customers, who rank more than one feature to be important, the factors that they look
for while deciding which petrol pump to choose.
FINDINGS
The findings are being presented in following tables, which help in better comprehension of the
data.
Reasons for visiting most preferred station
PSO
_____________________________________
Better Fuel Quality 4 57%
Conv. of Location 7 100%
Better Service 5 71%
Credit 3 43%
Relationship 3 43%
Urgency 2 29%
Shell
______________________________________
Credit 9 41%
Relationship 7 32%
Urgency 4 18%
Caltex
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Credit 2 50%
Relationship 1 25%
Urgency 2 50%
PSO and Shell

_________________________________________
Credit 4 527%
Relationship 3 20%
Urgency 4 27%
PSO and Caltex

___________________________________________
Credit 2 30%
Relationship 1 20%
Urgency 10%
Shell and Caltex

Credit 4 57%
Relationship 3 21%
Urgency 1 7%
The below tables clearly depict the picture where we can see that the main reason that attracts
customers to PSO pumps is the convenience of location of PSO pumps. All PSO only going
respondents agreed to this feature. Besides location PSO pump is also preferred because of better
service that the company supplies.. The PSO and Shell going customers believe prefer these two
pumps because of their better fuel quality. However PSO and Caltex going customers viewed the
convenience of location as the most important factor for going to either of these pumps.
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QUESTION NUMBER: 4
HOW DO YOU RANK THE OVERALL SERVICE LEVELS YOU GET AT
YOUR PREFERRED PETROL STATION?
PURPOSE OF QUESTION
The aim of this question was to evaluate the qualitative aspect of the customer thought process.
This aspect of customer preferences was necessary to evaluate in order to depict a picture of
where Shell stands in the mindset of the customer with regards to service level.
The customer was asked to compare the service level of Shell with that of any other company’s
petrol pump and rank it on basis of the options provided to the customer. In order to get accurate
answers; a neutral option was also placed so that in case the problem of inarticulate customers is
faced, the entry of wrong and biased responses can be prevented.
The question had the following answer responses:

 PROBABLY THE BEST
 VERY GOOD
 ALL RIGHT, NEITHER GOOD NOR BAD
 NOT AT ALL GOOD
 PROBABLY THE WORST
The aim was that once the information has been gathered through this question, we would be
able to further analyse the data in case we find that the satisfaction level is not according to the
desired level. In this regard it has been decided that the bench-mark level for satisfactory
performance is OPTION “A” i.e. any response other than the OPTION “A” would be treated as
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an error and would be analysed in order to determine the reason for this error. For this reason, the
data analysis approach is presented below.

In order to analyse the data based on the above-mentioned objectives, the graphical form of data
depiction has been carried out.
FINDINGS
The customer satisfaction level is being depicted in graphical form
PSO
SATISFACTION LEVEL n = 100

Excellent 32
Good 31
Satisfactory 26
Bad 5
Worst 3
No response 3
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Shell
SATISFACTION LEVEL n = 100

Excellent 29
Good 42
Satisfactory 21
Bad 0
Worst 3
No response 5
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Caltex
SATISFACTION LEVEL N = 100

Excellent 07
Good 23
Satisfactory 40
Bad 09
Worst 02
No response 19
QUESTION NUMBER6
Which petrol station do you think has the appropriate fuelling time?
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Petrol station with appropriate fuelling time:

PSO 18 18%
Shell 12 12%
Caltex 4 4%
PSO and Shell 54 54%
PSO and Caltex 1 1%
Shell and Caltex 2 2%
None 9 9%
QUESTION NUMBER: 7
Most reliable fuel company in consumers perception?

PSO 25 25%
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Shell 19 19%
Caltex 01 1%
PSO and Caltex 03 3%
All three 01 1%
QUESTION NUMBER: 8
Fuel Company giving the best customer care Service?

PSO 25 25%
Shell 19 19%
Caltex 01 1%
PSO and Caltex 03 3%
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All three 01 1%
WORK CONTRIBUTION TABLE
Group Members Contribution %

Manzoor Hasan Faruqui 25%
Farah Taji 25%
Muhamad Ali 25%
Turab Hussain 25%
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Questionnaire
________________________________________________________________
1. On an average how many times do you visit a petrol station
_______Daily
_______Twice a weak
_______Thrice a weak
_______Other Please specify
2. Which petrol station(s) do you mostly visit
_______PSO
_______SHELL
_______Caltex
_______Any other
3. Why do you generally visit the above mentioned stations
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PSO Shell Caltex

Better fuel quality
Convenience of location
Better service
Availability of credit facility
Relationship
Urgency rather than preference
4. How do you rank the overall service level of each of the following (Just Tick)
PSO Shell Caltex
Excellent
Good
Satisfactory
Bad
Worse
5. Please identify the status of the below mentioned services
# Services Code Want

Awareit Don’t Use
Unaware Don’t use
want it
A Oil change O
B Air/Tyre facility A
C Drinking water D
D Convenience stores C
E Toilets T
F CNG G
G Workshops W
H Car wash CW
6. In your opinion at which patrol station fueling time is appropriate ?
_______PSO
_______Shell
_______Caltex
7. Which fuel company is reliable in your opinion ?
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_______PSO
_______Shell
_______Caltex
8. What is the service level of pump attendants in your opinion at : (Just Tick)
PSO Shell Caltex

Very helpful Very helpful Very helpful
Helpful Helpful Helpful
Unconcerned Unconcerned Unconcerned
Unhelpful Unhelpful Unhelpful
Very unhelpful Very unhelpful Very unhelpful
9. Please complete according to the Legend given below each box :

(If usage status is NO then proceed to question 6 )
A B C D E
Usage Where do Satisfaction Reasons for Want to use in
status you avail Level
these
services
Oil change
Air/tyre facility
Drinking water
Convenience
store
CNG
Workshop
services
Car wash
Toilets
Legend Yes(Y) Shell(S) Completely None(1) Yes(1)
No(N) Caltex(CX) satisfied(1) Know No(2)
PSO(P) Satisfied(2) now(2) Not
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Neutral(3) Use Other(3)
Dissatisfied(4)
concerned(3)
Completely
Dissatisfied(5)
10. In your opinion, which fuel company, gives the best customer service.
_______________________________________________________
Personal Information
Name: __________________________________________________________
Age: ___________ Gender: ___________ Occupation: ______________
Cell: __________________________________________________________
Email: ___________________________________________________________
CONCLUSION
We test the hypothesis and conclude that Null Hypothesis is rejected and Alternate Hypothesis is
accepted, i.e.: Comparative analyses of Oil companies in Karachi are not equal.
People prefer PSO over Shell, Caltex and other Oil Companies due to the facilities provided by
PSO and their better customer services. This conclusion is drawn from the above facts and
figures as well as from the survey duly conducted by filling above mentioned questionnaire from
peoples availing the services of these Fuel companies.
RECOMMENDATION
Based on the conclusion and the facts,
We recommend that PSO must have to adopt competetive strategies and implement innovative
ideas in order to maintain it status.
We recommend that PSO must have to:
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• Make innovations rapidly
• Improve their quality.
• Should provide facilities to their customers according to their needs and requirements.
• Keep in mind the nature of consumer while offering services.
• Should reduce cost so that lower class can also afford it.
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CONSUMER PREFERENCE SURVEY

“METHODS IN BUSINESS RESEARCH”

BAHRIA UNIVERSITY RESEARCH REPORT

The following research was carried out through distributing questionnaires to a

PRELIMINARY DATA COLLECTION

Following three types of information is searched from above mentioned resources:

• Background information of PSO, SHELL & CALTEX.

Background Information of PSO:

Chronology of Events leading to the formation of:

Pakistan State Oil Co. Ltd. (PSO)

Government incorporates "Petroleum Storage Development

23-08-1976 Name of PSDC changed to State Oil Company Limited (SOCL).

Government purchases ESSO Undertakings, vests their control in

To excel in delivering value to customers as an innovative

and dynamic energy company that gets to the future first.

PSO COMPANY PROFILE:

Excellence in Customer Service:

PSO serves a wide range of customers throughout Pakistan, including retail,

Total Quality Control:

transportation and delivery of products is the cornerstone of PSO's quality

Health, Safety and Environment:

Corporate Social Responsibility:

PSO is highly committed to fulfillment of its corporate social responsibility and

Reform of Corporate Governance:

PSO's comprehensive and far-reaching corporate renewal programme resulting in

Effective implementation of corporate reform and business development strategies in

PSO MISSION STATEMENT & VALUES

We are committed to leadership in energy market through competitive advantage in

Professionally trained, high quality, motivated workforce, working as a team

Royal Dutch Petroleum Company to supply petroleum to Asia.

Crude Oil Prices:

WHY HEDGE OIL?

PLANNING FOR THE FUTURE:

Here’s how 169 million consumers are being ripped off:

 Privilege Loyalty Cards.

So moderating variables are the customer services such as:

Chi Square Goodness of Fit Test

Step-1: State the Null & Alternative Hypothesis.

ii. ALTERNATE HYPOTHESIS:

Step-2: Level of Significance:

Step-3: Calculate the Critical value.

Then, from Chi-Square Distribution Table

Step-4: Compute the Test Statistics

Test Statistics( χ ) = ∑ [(o – e) ^ 2/ e]

COMPANY’s OBSERVED EXPECTED (o-e) (o-e)^2 (o-e)^2 / e

Detail of study includes:

Purpose of the study

PURPOSE OF THE STUDY:

The Need for Information:

sampling items that will be part of the research

Element and units:

Karachi was selected as the city where research would be considered.

ANALYSIS AND INTERPRETATION OF QUESTION

DATA ANALYSIS APPROACH

PETROL STATION n = 100 %

The answer options were as follows:

DATA ANALYSIS APPROACH

Better Fuel Quality 3 75%

PSO and Shell

PSO and Caltex

Shell and Caltex

Better Fuel Quality 32 809%

The question had the following answer responses:

DATA ANALYSIS APPROACH