ABOUT PSO Pakistan State Oil A New Vision A New Spirit As the largest oil marketing company of Pakistan,

PSO is engaged in the storage, import, distribution and marketing of petroleum products, petrochemicals, Aviation & Bunker fuels, LPG and CNG dominates the countrys fuel and energy need. Since its inception in 1976 the company has been meeting more than 70% of the countrys fuel needs. PSOs 3805 outlets all across the country markets more than 12 million tons of fuel products annually. This network is supported by PSOs 28 storage facilities with a capacity of more than 800,000 tons. PSO took a major step in improving its distribution facilities by acquiring 12% equity in the 800km long Karachi-Mehmoodkot White Oil Pipeline. As part of PSOs policy of providing better customer service it has embarked upon its New Vision retail development program. Equipped with the most modern facilities like electronic dispensing units, auto car wash, convenience stores, internet facilities and business centres these stae of the art designed stations provide greater customer confidence and a friendlier environment. As a manifestation of PSOs greater customer focus a PSO 24hr PSO Customer Service has been launched where customers can lodge their queries and suggestions about various PSO products and services. Along side its retail network PSO is playing an equally important role in the industrial sector. From the locomotives of Pakistan Railways to the giant turbines of power projects, all are fuelled by PSO. Being fully alive to its responsibilities towards the agriculture sector PSOs 700 strong agency network helps keep the farm machinery running. Further, its kerosene sales are a major source of energy for the rural and lacking gas facilities. PSO remains equally strong in Aviation and Bunker Sales. PSO has been constantly upgrading its facilities to serve a wide range of commercial aircrafts. Through a chain of eight Aviation Service Stations scattered all across the country PSO fuels the aircrafts of many local and international airlines. Acquisition of new Lahore Terminal Complex at the Lahore International Airport has enabled PSO to serve the busiest corridor of East/West bound flights benefiting the airlines in shape of time saving and lesser fuel burn off. while its bunkering facilities at all the major ports of country fill up the ocean liners of many nationalities facilitating the nations international trade. In its endeavor to provide quality lubricants, PSO has formed an alliance with world-renowned company Castrol whose products are manufactured at PSOs own ISO 9000 certified facilities ensuring the highest quality standards for both retail and industrial sales.

More cordial relationship with its dealers is one of the important objectives of PSOs New Vision programme. To give them a sense of participation PSO has instituted Top Dealer Awards and Million Liter Awards whereby efforts of the high performing dealers are recognized. Emergence of Health Safety & Environment (HSE) as the corner stone of PSOs corporate governance testifies to its commitment to environmental protection. Complete HSE certification of all its facilities and installations is one of its major goals for the coming months which are being vigorously pursued. Financial & Operational Highlights of the year: 1999-2000 All time record sales revenue of Rs.135 billion, ($2.10 billion) up 17% over prior the year Growth of 5% in its sales volume that touched 12.7 million tons Profit before tax of Rs.3.6 billion ($ 56 million); up 7% over prior year Highest ever cash dividend of 100% Rs.1.4 billion Successfully took over the fuel oil imports from the Government of Pakistan Signed long term product off-take agreement with Pak Arab Refining Company (PARCO) Ranked as No.1 performing company in Pakistan by Karachi Stock Exchange received award for the 16th consecutive year Board of Management reconstituted by Government of Pakistan; principles of corporate governance established Privatization of PSO is underway whereby JP Morgans financial advisory consortium is assisting the Government of Pakistan in the privatization process. They have undertaken the initial due diligence including financial and regulatory issues and subsequent to which the interest of the potential investors in the transaction will be solicited. THE VISION Meeting the fuel and energy needs of the people of Pakistan and the countrys vital institutions. Setting the highest standards in customer care by offering and maintaining maximum quality control of products and services. Nurturing an atmosphere of trust and coordinated teamwork that enables sustained peak performance. Operating as the lowest cost supplier with assured access to long-term

supplies, even in the remotest areas of the country. Undertaking initiatives that have an impact on the lives of people in a constructive manner. Fulfilling our responsibility as a national institution by making a dynamic contribution to society and helping to build a progressive Pakistan. ENERGIZING INDUSTRIAL INSTITUTIONS Throughout the 26 years of its existence, PSO has been a company that has merged sound business sense with its national obligations. Taking immense pride in being Pakistan State Oil, PSO has always been on the forefront of national causes and commitments. Be it uninterrupted operation of electricity turbines of WAPDA and KESC or the supply of staggering quantities of Fuel Oil to HUBCO and other IPPs, PSO meets the majority of the countrys Fuel Oil requirements. By ensuring timely supply of petroleum products to the nations defense forces, from the northern mountain ranges to the shores of Gawadar, PSO makes sure that the nations defense is never compromised for want of fuel. PSOs aviation stations at all major airports of the country continue to facilitate domestic and international air travel, its Bunker Fuel facilities fill up the ocean liners of many a nation while its efforts to provide fuel in the mountains of Saindak have earned wide recognition. PSOs commitment to national development is amply reflected by its nearly three decades of operations. The nation can be confident that we shall continue to honor that commitment in the future too. INVESTING IN THE FUTURE Not being a company to rest on its laurels, PSO involves dynamically to meet challenges of change. While taking justifiable pride in our current achievements, we are also gearing up for the demands of the future. With the acquisition of 12% equity in the new White Oil Pipeline Project (WOPP) being laid from Karachi to Mehmoodkot, PSO has ensured an adequate stake in the countrys future petroleum infrastructure. With an ultimate capacity to carry 12 million tons, WOPP is expected to become operational by 2002. With the completion of its Into-Plane and Fuel Farm facilities at the New Lahore Airport, PSO will be able to capture 100% business at this emerging hub of air travel. The project is likely to be completed by March 2002. At PSO, a thoughtful and careful strategizing goes a long way toward transforming possibility into certainty for the future. MEETING NEW BUSINESS CHALLENGES

As an era of deregulation, uncertain economic outlook, slowdowns, and stiff competition and price volatility has beckoned, PSO has undergone a smooth transformation. The Government is keenly pursuing deregulation and privatization of the oil and gas sector. Effective 1st July 2001, the Oil Companies Advisory Committee (OCAC) has been revising
the POL prices on a fortnightly basis. Fuel Oil imports and prices were deregulated effective 1sr July, 2000 while Gas Oil imports have been deregulated from 1st January 2001. The LPG prices were deregulated from 1st September. 2002. Self-management of freight pool was implemented by the oil marketing companies through OCAC from 15th March, 2001.

As the first oil company to import HSD, PSO has enhanced its handling facilities at Zulfiqarabad Oil Terminal, Port Qasim. This new arrangement for HSD handling has not only relieved Karachi from noise and environmental pollution but also reduced the traffic congestion of POL tankers at Keamari. In the past few years, Mogas is being rapidly replaced by the Compresses Natural Gas (CNG) as fuel for a variety of vehicles. To cater to the demands of this growing segment, 30 PSO stations are now providing this facility while 40 more CNG stations are in various stages of development. A new lubricant specifically developed for CNG engines is also being introduced. With the availability of greater quantities of Liquefied Petroleum Gas (LPG) from PARCO and other refineries, PSO is attaching an even greater emphasis on providing this customerfriendly fuel to areas where natural gas is not available. For staged deregulation of the oil and gas sector, at PSO we have harnessed our strengths to stay ahead of the competition as we endeavor to pass on the benefits of deregulation to our customers. MANAGEMENT PROFILE The federal Government has constituted the Board Of Management (Oil) to control, manage and direct affairs of the Company; whereas the direct management is vested in the Managing Director who exercises and performs all the powers and function of the Board Of Directors of the Company. HUMAN RESOURCES Total Strength: 2795 Bargainable employees: 1830 Management Staff: 965 The Company has maintained the tempo of achievements through wholehearted commitment & hard work of its Human Resources and full support of its dealers / agents and customers. PSO is one of the top 25 companies as the recipient of TOP 25 Companies Award every year, for the last 13 consecutive years. PSO is the only

company from Pakistan, which is being listed as one of the Top- 1000 companies in Asia (as per Asia Week Magazine). All these attributes endorse one thing, grow with grace and sound earnings, along with all those associated with PSO, i.e. its customers, business partners, manpower and share holders. This has been the greatest asset of the Company's Management, able guidance from its Board of Management (Oil), Ministry of Petroleum & Natural Resources, and from all cadres putting in combined efforts with commitment with excellence.