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History Of The Pakistan State Oil Company Business Essay

Paper Type: Free Essay Subject: Business
Wordcount: 4667 words Published: 1st Jan 2015

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The creation of Pakistan State Oil (PSO) can be traced back to the year 1974, when on January 1st; the government took over and merged Pakistan National Oil (PNO) and Dawood Petroleum Limited (DPL) as Premiere Oil Company Limited (POCL).

Soon after that, on 3rd June 1974, Petroleum Storage Development Corporation (PSDC) came into existence. PSDC was then renamed as State Oil Company Limited (SOCL) on August 23rd 1976. Following that, the ESSO undertakings were purchased on 15th September 1976 and control was vested in SOCL. The end of that year (30th December 1976) saw the merger of the Premier Oil Company Limited and State Oil Company Limited, giving way to Pakistan state Oil (PSO).

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After PSO’s inception, the corporate culture underwent a comprehensive renewal program which was fully implemented in 2004. This program over the years included the revamping of the organizational architecture, rationalization of staff, employee empowerment and transparency in decision making through cross functional teams. This new corporate renewal program has divided the company’s major operations into independent activities supported by legal, financial, informative and other services. In order to reinforce and monitor this structural change, related check and balances have been established by incorporating monitoring and control systems.

Human Resource Development became one of the main priorities on the company’s agenda under this corporate reform.

It is due to this effective implementation of corporate reform and consistent application of the best industrial practices and business development strategies, that PSO has been able to maintain its market leadership in a highly competitive business environment.

PSO is the market leader in Pakistan’s energy sector. The company has the largest network of retail outlets to serve the automotive sector and is the major fuel supplier to aviation, railways, power projects, armed forces and agriculture sector. PSO also provides Jet Fuel to Refueling Facilities at 9 airports in Pakistan and ship fuel at 3 ports. The company takes pride in continuing the tradition of excellence and is fully committed to meet the energy needs of today and rising challenges of tomorrow.

Pakistan State Oil, the largest oil marketing company in the country, is currently engaged in storage, distribution and marketing of various POL products. The company’s current market share of 82.3% in the black oil market and 59.4% share in the white oil market, alone speak volumes about its success.

PSO Major Highlights – FY 2009

Sold 7 million tons of furnace oil – the highest in the last 8 years

Efficiently managed supply to the power sector despite the liquidity crisis

Imported approximately 90% of the country’s POL imports – 3.4 million tons of HSD and 5 million tons of FO

Helped in the revenue collection of more than Rs. 161 billion to the GOP (Sales Tax: 97 billion, taxes: 1.4 billion,PDL: 61 billion)

Extended support to various charitable organizations in the health & education sector including contribution for the rehabilitation of IDPs due to the Swat operation

PSO Vision

To excel in delivering value to customers as an innovative and dynamic energy company that gets to the future first.

PSO Mission

We are committed to leadership in energy market through competitive advantage in providing the highest quality petroleum products and services to our customers







Corporate Responsibility

Products & Services:

Pakistan State Oil, the largest oil marketing company in the country is currently engaged in the marketing and distribution of various POL products, including Motor Gasoline, High Speed Diesel, Furnace Oil, Jet Fuel, Kerosene, LPG, CNG, Petrochemicals and Lubricants. In addition to this we also import different products according to their demand pattern and possess the biggest storage facilities representing 80% of the country’s total storage capacity.

PSO caters to POL requirements of a wide spectrum of customers comprising the retail consumer, various industrial units, government, power projects, aviation and marine sectors of Pakistan. We are truly the drivers of economy of this country.

A network of 3612 retail outlets enables us to reach Pakistanis from Nagarparkar to Sost. We are proud to cater to the fuel and non fuel needs of approximately 2.8 million customers per day. 

PSO industrial consumer dominance in the government sector can be judged by the fact that all the major government entities like OGDC, Pakistan Army, Pakistan railways, Navy, NLC, PAF Wah and HIT have entrusted PSO to meet their POL needs.

Besides supplying fuel to national power utilities like WAPDA and KESC, PSO is the sole furnace oil supplier to all Independent Power Projects (IPPs) in Pakistan with a share of over 80% in furnace oil market. Moreover, PSO is also playing its due role in meeting the growing energy demand of the country.

PSO also supplies fuel to industrial units like textile, cement, agriculture, transport etc. Our industrial consumer base includes prestigious entities like the Presidency and the Prime Minister Secretariat, where PSO has developed consumer outlets for timely refueling of their fleets. 

Furthermore, PSO also serves the fuel needs of both national & international air carriers. We also provide jet fuel into-plane refueling facilities at 9 airports of Pakistan i.e. Karachi, Lahore, Islamabad, Peshawar, Multan, Faisalabad, Turbat, Pasni and Sialkot.

We also supply fuel to ships at Karachi Port, Korangi Fish Harbour & Port Qasim. Moreover, we cater to the fuel requirements of Pakistan Navy, Maritime Security Agency, Karachi Port Trust, PNSC, Faisal Marine Oil Services (Pvt) Ltd.


Human Resource (HR) Department has been there in PSO since it was formed. Initially, there were four “Personnel Departments” of Premier Oil Company Limited, Pakistan National Oil and Dawood Petroleum Limited and State Oil Company Limited. Merger into one department created some problems in the company as many employees who were in these departments had to be relocated or given early retirements. In 2000, the “Personnel Department” was changed to “Human Resource Department”.

Previously the function of Personnel department at PSO was only related to the employee functions. The employee functions consisted of keeping record of the employees, how punctual and regular are they, what are their benefits and salaries, what is their background, how much experience they have, their personal records were also kept and similarly only employee-related records were kept.

As the time passed and the Board of Management of PSO realized that more documents about employees need to be included in the Human Resource Department to keep updated information and record of employees and to retain a good and efficient workforce so they expanded the activities of the HR department. The HR department activities now consist of job analysis and design, recruitment, HR Planning, Succession Planning, selection, follow-up of orientation program, placement, identifying employee’s training and development needs, career counseling, performance appraisal, benefits, disciplinary actions against misconduct and compensation management.

Alongside the development of its physical facilities, PSO is deeply conscious of the pivotal role that human resources play in the success of an organization. As a matter of fact, human resource development has been identified as an area of key importance. While strengthening the ranks of its work force with quality professionals at various levels of management, the company also undertakes several initiatives for improving productivity and efficiency at all levels of services. Through computer training, various courses, sponsorships of staff for studies at professional institutions and seminars, the company is providing its employees on going opportunities for continuous self-improvement and learning.

In recent years, health, safety and environment (HSF) has emerged as one of the major themes of corporate governance at PSO. As They Strongly Believe That Human Resource is the asset that should be appreciate with the passage of time. Consequently, PSO considers a strong focus on the development of a value added and Worthwhile Investment.



Job designing is not a formal process but it is necessary for HR department when it wants to hire new employees or give promotions to the current employees for a particular designation. Employees (mainly executives, General Managers, Acting General Managers, and Deputy General Managers) are also involved while designing the job since they are the ones who decide which tasks, responsibilities and duties are to be performed by which employee.


With the implementation of SAP it has become easier to store and update information about employees. The HRIS is updated daily and it also updated when there is hiring, transfer, sanction of loan to employees, increase in allowances and etc. HRIS stores all information about employees like their personal backgrounds, financial position, pay slips, leaves availed, designation, performance appraisal, how many promotions have they got, projects on which they worked, training and development they had, their weaknesses, interests, skills and abilities and many more things.

Authorization to HRIS is given to Executive Director of HR department, Senior Executive and Senior Officer has authorization for storing and updating information on Recruitment, Transfer, Time Management and Leave Policies. Head of HR and Payroll department are responsible to verify that employees get their salary by verifying from bank about transfer of salaries from PSO account to Employee’s account. Both of them have access to this information in HRIS. Department can also verify this information from HR department. So from each department some employees have authorization to access HRIS. Each department is allowed to use its information and they cannot have access to the information of other departments.

Because of SAP job description for many jobs changed as many jobs required technical skills that are the employees should feel comfortable to use computers. Because of this HR department had to change and update the information of job designing.


Following are the steps that HR takes for designing job:

Identifying the job

Gathering job profiles



Identifying The Job: The first step is to identify the job vacancy. The HR people identify the number of jobs that are in the company and then design the ways of collecting the information.

Gathering Job Profiles: After identifying the job, the HR people then gather information about the job. They do so by obtaining information from HRIS. They also do surveys, interviews of people doing the same job, discussion with the department’s supervisor and also take the help of experts to know the tasks, skills and responsibilities required to do the job and also to see how effective their compensation package is.

Rationalizing: After gathering required information, they sort the information to include the necessary and job-related information and eliminate the information that is not relevant. They also rationalize the information according to the regions. For example, the job specification of sales officer in Karachi will be different from that of Bahawalpur.

Documentation: After rationalizing the information they document the information in the form of job description so that they can refer to it whenever required. They keep it both in the form of manual and also in the HRIS.


HR people consider it important to inform employees while collecting information because employees then feel valued and they think that their opinions will be considered and they have some impact on the decision HR people make. For example, last year they organized seminar of Organizational Health Service which was done on behalf of PSO to find out that how employees feel about the company and the result was that 80-90% of the employees were happy. There were also some questions regarding the company like tell us one thing you would like to change in the company. Afterwards, they told that their employees about it and told them that they were very happy with the results and they asked the employees who were unhappy to come to HR people and discuss their problems so that they can find a solution for it.

For job analysis and design, they also take the employees suggestions into consideration through suggestion boxes and the e-mails that they get. The supervisors are also asked to have open communication with their employees to see that they do not have overload of work and they are satisfied with their work.


Performance standards make the employees’ performances be measured. It helps HR people know that whether there are any defaults in their job design. For the evaluation of performance, they use comparison method. The supervisors are required to do it on a weekly basis so that any problem can be identified beforehand.


In this approach, workers are required to do same work again and again and their task is simplified so that it requires less time and effort and the work is done efficiently. The drawback of this approach is that employees get bored of doing same thing and this result in fatigue. But there are some jobs about which nothing can be done. For example, chemist cannot be sent to the marketing department as his work is related to the chemicals and there are no departments in PSO where he can be sent to enhance his/her skills unless that person is really willing to learn some other skills other than his/her field.


PSO has Job Rotation Scheme which employees can use when they wish to or when HR wants to move an employee to other department. Its disadvantage is that if an employee acquires skills that he/she will not use it, it will be an expense for the company so it is additional investment by the company. For example, if an IT person is moved to Brand Management department and he has no interest in it then it will be of no use to the employee and the company. But if the same employee is sent to SAP department then it will be beneficial both for the company and the employee.


Human Resource planning is important so that whenever a problem such as vacancy of any job occurs it can be dealt quickly. That is why there is a need of proactive approach. Everything needs to be planned for efficient and healthy working of the company.

The main causes of demand of employees are company expansion and because of implementation of SAP PSO had a new department named “SAP Department” and they had to hire people for this department and. With the help of Human Resource plan, HR people can easily predict the future vacancies that are expected which is by analyzing the trend projections, asking the departments’ head if they think that an employee of his department might leave the company and by seeking help of experts.

Employees’ actions such as terminations, resignations, deaths etc. cause demand of employees. Because of these actions a gap is formed and the HR people have to intervene to fill this gap.

Estimate of Human Resource supply is done from analyzing past data, history, past experience and also the demand that might occur. It is necessary to proactively decide that who will replace who if there is any vacancy in order to allow the company to work in a harmonious way.


Recruitment is the process of locating identifying and attracting capable applicants. Sources of recruitment for PSO are as follows.

Internal search


Employee referrals

Public employment agencies

Walk in candidates

College and Universities etc.


When there is a vacancy of PSO a large numbers of applications are received mainly through the advertisement in the newspapers or through the referrals of current employees. The employees screen the applicants. Because the recommenders know both the job and the person being recommended they tend to refer applicants who are well qualified for the position.

PSO prefers internal supply of employees for a couple of reasons:

Current employees are already adjusted with the culture of organization.

It reduces the cost involved in recruitment, selection, orientation and training programs.

The want to encourage their current employees that they care for them and helping them to grow by promoting them.

The internal employees feel the sense of belongingness, are motivated and become more productive, which is also beneficial for the organization.

Internal candidates has to be a confirm employees of PSO who have completed atleast one year of service in their existing designation.

Selected candidates are required to join the new position after getting clearance from seniors and will be on probation for a period of three months.

External Recruitments requirements:

No candidate under age of eighteen can apply for the job

Department Heads are also involved in hiring processes

Human resources jointly with the department heads decide the salary range

Minimum qualification must be a bachelor degree

Candidates are required to successfully complete any job related written test given to them


PSO’s policy is that if the employee has done something wrong then the company uses the option of firing as a mean of de-recruitment. This seldom happens unless someone has broken the rules of the company. Sometimes employees are also transferred. PSO recently used another method of de-recruitment. They used the Golden handshake scheme and voluntary separation schemes.


The two major challenges faced by the PSO during recruitment are:

Growing competition: The major challenge that PSO had to face recently was the competition by “Telenor” and “Warid”, which suddenly came up and started attracting the manpower of PSO and other organizations by offering high wages and incentives. Many of the PSO employees left the organization to join Telenor and Warid and the harmonious working system of the company was disturbed by the competition and it took them enough time to stabilize the organization and get the company’s operations back on track.

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Availability of qualified employees: The second challenge is the availability of qualified employees in the market. Sometimes it happens that when they are hiring a person for particular designation then there is shortage of qualified employees and the pool of applicants is very less and they decide not to hire any person and to wait for sometime or give training to internal employee and promote him by saving the additional cost that would have been required for hiring new employees.


Selection is the process of screening job applicants to ensure that most appropriate candidates are hired. In PSO they select an employee on the basis of his qualifications. Different selection devices are used to choose the best suitable candidate for the job.


The selection process is a series of specific steps used to decide which recruits should be hired. These are stated below:


The applicants have to drop their Resumes in dispatch department or send it on the website. The HR people also sort the information that they have in their HRIS about the people who had left their resumes before like walk-ins.


Those applicants who match with the company’s requirement are informed about the date of test. It is an intelligence, aptitude and ability test. If the organization has to select 15 applicants than 45 employees are called for an interview and the best 15 are hired. The challenge that the organization has to face during the hiring of employees is the limitation on hiring people. PSO only hires the employees that are required to perform tasks.


The interview depends on the level of employee to be hired. If it’s for low level then only one interview is conducted and if an employee is hired for the middle or top management then the series of steps follows. Normally there is one employee and 3-4 employers during the interview. The advantages from this interview structure are that the extremes are cancelled out; biasness is removed, discrimination is discouraged, true judgment is made and the employer’s expertise in different subjects helps in finding the right person for the right job. The disadvantages are dominating employer if any, the employee gets nervous in front of many employers, conflicts between employers that who should be selected.


After the interview is conducted, employee’s backgrounds and references are checked to avoid false claims, work experience, salary, honesty and credibility of employees. Employment references are given more preference then personal references because it tells the employers about the employees past working conditions, loyalty and behavior at work.


After an applicant has been selected, he is physically examined. For jobs with certain requirements, the physical examination has some validity, which includes blood test, blood pressure check up, temperature and chest X-rays.


The managing director of HR department makes the final decision for hiring the employee’s after they have been nominated by the senior executives who gets the selection process going. The unselected applicants are mostly notified through letters after the applicant is selected and confirmed for the job. The record of unselected applicants is maintained for the future job openings.

Training and development practices at PSO:

The training processes in PSO are aimed at providing the basic company related and job related knowledge to the newly employed applicants. The training processes may take shorter times like a discussion of few minutes or longer times like 2-3 days depending on the nature of work and the requirements of the job. It is also some times on the ability of individual that how early he picks the information. The trainers are well capable of providing the training services to the employees, they are learned, experienced, forthright and intent. The training process is aimed at putting the trainees at ease, making them take interest, making them inquire the ambiguities and making them available of the full knowledge that is needed for their respective jobs.

The purpose of training the existing employees is to upgrade the capabilities and efficiency of all those employees and prepare them for more responsible positions in future. Provide employees with greater opportunity to grow and succeed with in the company. To strengthen management and professional teams at all organizational levels. To construct training programs and provide employees a variety of Job skills, Technical, Clerical and Supervisory and Managerial courses. The employees are trained technically and periodically either locally or abroad according pre-planned programs. Training in PSO upgrades capabilities of employees, provides guidance and individual counseling.

Some techniques and methods for Training Employees:

Training through lectures

Use of Visual aids for training

Training through making employees visit job areas

Training while working on job

Training for special tasks etc

Employee compensation at PSO:

Employee with receive compensation that is relevant to the field experience matching with approved salary structure of the position.

Employee opens up an account in the company preferred bank.

The salary is credited in the bank at the end of every month.

On resignation, the employee is paid his dues within fifteen working days starting from the day he left the organization.

Increments are also given at the end of the year, increments are percentage of salaries.

Promotions are given on good performance after completing two years in the current grade.

Bonuses are given on worthy performances as a way of appraising.

Bonuses are also given to the permanent employees on both of the Eids and on other times too if the management decides to do so.

Employee Relations in PSO

Equality of employees:

In PSO, every employee has some integrity & value in his or her own. All employees always are equal in PSO. There is not any discrimination in employees in the organization on the basis of ethnicity, religion, color, race etc.

Health & safety:

PSO never compromise on the health & safety of employees. This is the reason they have tight security of its offices, pumps and stores . IF you want to get in the building of PSO or the pumps and shops of PSO you have to go through the security. PSO believes that employee should feel secure physically as well as mentally. Because of this PSO provides its employees job security in the hour of recession.

Medical Benefits:

Confirmed employees and their immediate family members are covered in this policy. These benefits are provided through the insurance company. These benefits cover both out-patient and hospitalization.

Workplace Safety Measure

Intelligent Fire Detection System

PSO, being the company that gets to the future first remain abreast with the latest inventions not only in providing systems that ensure customer health but also in the systems that ensures the safety of PSO’s Assets and its Human Resource. Keeping this vision in consideration, PSO has opted for state of the start Intelligent Fire Detection System for the head office and for other PSO facilities. The purpose is to detect the fire at its early stage and the purpose is not confined with detection but it also identifies the exact location where fire has actually broken out.

Employee Wellbeing Measure

Water Filter

As mentioned earlier, PSO gives due importance to its employees at every level.

A step towards the employees’ wellbeing is the installation of water filter plant at PSO facilities i.e. terminals, depots, aviation stations, LPG plants, blending plants and retail outlets. There are three main sources of drinking water supply at PSO facilities;

1. Ground Water

2. Local Water Supply System

3. Tankers

The drinking water sample is collected for testing at laboratory. Ground water is tested once a year for microbial & chemical constituents while piped & non-piped system of supply is checked bi-annually for microbial constituents and once in year for chemical constituents.


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