Karachi April 30 2024: Pakistan Petroleum has experienced a commendable enhancement in collections from customers, resulting in improved collection ratio of 74% compared with 49% during the corresponding period.
Share price of the company increase by PKR 3.26 or 2.91% in today trading at Pakistan Stock Exchange. The stock provided return of 73.19% since start of this year.
Company has recovered Rs 195 billion during current period versus Rs 126 billion in corresponding period. Due to this favourable development, the escalation in trade debts was kept at approximately 13% during this period as compared to over 40% during FY 2023.
The upturn in collections can be attributed to the implementation of increased consumer gas prices, which took effect in January 2023, November 2023, and February 2024. This strategic adjustment has contributed to a deceleration in the accumulation of circular debt, thereby bolstering the Company’s financial resilience. It is imperative, however, to continue to monitor consumer gas prices in alignment with wellhead gas price adjustments to preempt any future resurgence of circular debt.
Moreover, the Company has demonstrated proactive engagement with stakeholders, including pertinent ministries, to address both immediate cash flow exigencies and to chart enduring solutions to the circular debt conundrum. This concerted effort underscores the Company’s commitment to sound financial stewardship and sustainable growth.
Sales revenue increased by Rs 10,485 million during the first nine months of fiscal year 2024 as compared to the corresponding period. The increase is due to positive price variance amounting to Rs 25,885 million, partially offset by negative volume variance of Rs 18,583 million. Further, take-or-pay revenue amounting to Rs 3,183 million has been recognised during the period.
Positive price variance is due to significant devaluation of Pak rupee against US dollar (average exchange rate for the current period was PKR 285 as compared to PKR 235 during the corresponding period), partially offset by decline in average international crude oil prices from US$ 90 / bbl during the corresponding period to US$ 85 / bbl during the current period.
Negative volume variance is mainly attributable to lower sales volumes from Kandhkot, Sui, Adhi, Hala, Dhok Sultan and Latif fields.
Profitability increased by around 18% as compared to the corresponding period. The main drivers are increase in sales revenue (as explained above) and significantly lesser tax charge, partially offset by higher operating expenses amid inflationary impacts and share of loss of associates.
Tax charge significantly declined on account of reversal of prior years’ tax provision pursuant to favourable decision of the Honourable Supreme Court of Pakistan (SCP) in respect of calculation of depletion allowance on well-head value. In the judgment, the SCP decided that royalty paid by a taxpayer is a separate component and not to be deducted while calculating well-head value for the purpose of depletion allowance. Accordingly, the Company based on the aforesaid judgment reversed the provision amounting to Rs 14,335 million pertaining to tax years 2003 till 2023 in respect of royalty effect of depletion allowance.
