Islamabad June 10 2023: Pakistan Petroleum Limited (PPL) is expected to announce cash payout of PKR 7.5 Billion in the last quarter of this fiscal year, according to Ministry of Finance Budget documents.
Government of Pakistan holds 67.5 percent state in PPL out of its total outstanding shares of 2,721 million, as per company financials.
Ministry of Finance (MoF) revised down dividend projection of PKR 8 billion to PKR 5 billion for this fiscal year while expecte cash payout to increase to PKR 15 billion (PKR 8.2 per share) for fiscal year 2024, which is 180 percent higher compared to projected payout for this year.
Sales revenue increased by PKR 73,742 million during the current period as compared to the corresponding period. The increase is due to positive variance on account of price (including change in exchange rate) amounting to PKR 70,798 million, coupled with positive volume variance of PKR 2,944 million.
Positive price variance is due to increase in average international crude oil prices from US$ 83 / bbl in the corresponding period to US$ 90 / bbl during the current period, coupled with significant devaluation of Pak rupee against US dollar (average exchange rate for the current period was PKR 235 as compared to PKR 172 during the corresponding period).
Positive volume variance is mainly attributable to Dhok Sultan, Kandhkot and Latif fields, partially offset by lower production volumes from Sui, Tal, Nashpa, Adhi and Shah Bandar fields.
Profitability
Profitability increased by over 56% as compared to the corresponding period. The main drivers are increase in sales revenue (as explained above), comparatively lesser share of loss of associate and increase in other income amid higher interest rates and net exchange gain, partially offset by higher operating expenses, royalties & other levies, exploration expenses, other charges and taxation.
Operating expenses increased on account of higher amortisation charge and well intervention activities, while royalties & other levies increased in line with higher sales revenue during the period.
Further, increase in exploration expenses is attributable to higher seismic data acquisition activities, whereas increase in other charges is largely on account of higher provision for windfall levy on oil and WPPF charge amid higher sales and profitability, respectively, in the current period. Furthermore, increase in taxation is on account of higher profitability and imposition of super tax at the rate of 4% as compared to corresponding period.
Cash flows improve
Overall collections from customers in absolute terms improved as compared to the corresponding period, however, trade debts increased by ~32% on account of higher sales revenue, which stood at PKR 484 billion as at March 31, 2023, as compared to PKR 366 billion as at June 30, 2022. Accordingly, Circular Debt continues to be considered as a critical risk in the achievement of the Company’s strategic objectives. The Company remained actively engaged with all stakeholders including relevant Ministries for both temporary relief to meet short-term cash flow requirements, as well as long-term permanent solution to Circular Debt.
