Pakistan state oil

Submitted By:

University Of Central Punjab, Lahore



Table Of Contents


3 .DEDICATION We dedicate this project to our parents And all the teachers who helped us while Completing this project and guided us rightly.

It would be an honor for us to thank AAMIR QAYYUM (Business Manager) and ZUBAIR AHSAN FAROOQI (General Manager) of Pakistan State oil Company Limited. We invoke peace for Holy Prophet Muhammad (P.ACKNOWLEDGEMENT We have the pearl of our eyes to admire blessing of the compassionate and omnipotent because the words are bound.H) who is forever torch. knowledge is limited and time is short to express His dignity. We feel highly privilege to ascribe the most and ever burning flame of my gratitude and deep scene of devotion to the Prof.U. 4 .B. AMJAD ALI who taught us “Change Management” with heart and also gave a guideline to this report. It is one of the infinite blessings of almighty ALLAH that He bestowed us with potential and ability to complete the present training and make a material contribution towards the deep oceans of knowledge. First we avail this opportunity to bow our head before ALLAH almighty in humility who given us the wisdom and perseverance for completing this piece of report.

Honestly. Corporate Leadership. INNOVATION: Creative Ideas. enviromen friendly and socialy responsible business practices. Community Development. RESPECT: Reaspect for Individuals. high quality. Environment.  Lowest cost operations and assured access to long-term and cost effective supply sources. 5 . Values Contribution. Safety. working as team in an environment. Equal Opportunity.  Sustained growth inearnng in real terms.VISION To excel in delivering value to customers as an innovative and dynamic energy company that gets to future first MISSION We are committed to leadrship in energy market through competitive advantage in poviding the highest qualit petroleum products and sevieces to our customers. Total Quality Management. Effective Communication. motivated workforce. based on:  Professionally trained. innovation and creativity and provides for personal growth and development. INTEGRITY: Business Ethics. VALUES EXCELLENCE : Passion for customer. which recognizes and rewards performance. New Products and Processes. COHESIVENESS: Teamwork.  Highly ethical. CORPORATE RESPONSIBILITY: Health.

distribution and marketing of various POL products. By 2003. jet fuel. the Government of Pakistan owned. It is due to this effective implementation of corporate reforms and consistent application of the best industrial practices and business development strategies. Gizri Lubricants (Pvt) Limited. Petro Lube (Pvt) Limited. rationalizing of staff. in order to reinforce and monitor this structural change. Salsons Lubricants (Pvt) Limited. that PSO has been able to maintain its market leadership in a highly competitive business environment. Aremai Petroleum (Pvt) Limited. kerosene. and renamed them Premier Oil Company Limited (POLC) under the Marketing of Petroleum Products (Federal Control) Act. the corporate culture underwent a comprehensive renewal program which was fully implemented in 2004. 1974 the Petroleum Storage Development Corporation (PSDC) was taken over by the government and was renamed the State Oil Company Limited. member of the world Economic Forum and winner of the Karachi Stock Exchange’s Top Companies Award. Mohsin Lubricants (Pvt) Limited and Salim Petroleum (Pvt) Limited. and petro chemicals. After PSO’s inception. informative and services. storage. PSO now a blue chip company. Petro Chemicals (Pvt) Limited. 1974. including mogas. fuel oil. PSO was the oil market leader in the country. It was engaged in import. HSD. enjoying a 79 percent share of the black oil market and 59 percent share of the white oil market. LPG. 1976 renamed it the Pakistan State OIL company Limited. On June 3. 6 . either directly or indirectly. nearly 54 percent shares of the Pakistan State Oil Company Limited. 1974 when the federal government took over the management of Pakistan National Oil (PNO) and Dawood Petroleum Limited (DPL). Mideast Oil And Grease Corp (Pvt) Limited. financial. CNG. related check and balances have been established by incorporating monitoring and control system. The government merged PNO and POLC into the State Oil Company limited (SOLC) and on December 30. This new corporate renewal program has divided the company’s major operations into independent activities supported by legal. It came into being on January 1. employee empowerment and transparency in decision making through cross functional teams. PSO also owned the following subsidiaries which have since been disposed of: Auto Oils (Pvt) limited.COMPANY PROFILE: Pakistan state oil was one of the two major oil marketing companies in the country. This program over the years included the revamping of the organizational architecture.

oil and lubricants in Pakistan showed a negative growth of 5. oil and lubricants (POL) industry in Pakistan was made up of two major players PSO and SHELL Pakistan. Moreover PSO is also playing its due role in meeting the growing energy demand of the country. The petroleum. PSO was the largest oil marketing company. Products and Services: PSO caters to POL requirements of a wide spectrum of costumer comprising the retail consumer. power projects. PSO industrial consumer dominance in the government sector can be judge by the fact that all the manor government entities like OGDC.OIL INDUSTRY IN PAKISTAN: Pakistan a modest producer of oil and gas. Pakistan Railway. PSO is the furnace oil supplier to all independent power projects (IPPs) in Pakistan with a share of 80% in furnace oil market. produced the bulk of natural gas. imported 70 percent of its crude oil requirements. although this status was likely to change with future demand increase. 7 . various industrial units. WAH and HIT have entrusted PSO to meet their POL needs. facing competition from these players. Pakistan Petroleum Limited (PPL). A network of 3612 retail outlets enables us to reach Pakistanis from Nagarparkar to Sost. White oil (mogas. The country was self sufficient in natural gas. HSD. government. PAF. CALTEX came in third. We are truly the drivers of the economy of this nation. Foreign companies currently operating in Pakistan included British Petroleum.8 million customer per day. JP-I and SKO) recorded a growth of 1. established in 1950. Besides supplying fuel to national power utilities like WAPDA and KESC. We are proud to cater to the fuel and non fuel needs of approximately 2. TOTAL PARCO was fourth and ATTOCK Petroleum had the smallest share of the market.8 percent due to the consumption of fuel oil. NLC. During the fiscal year 2003-4 the overall consumption of petroleum. aviation and marine sector of Pakistan. Pakistan Army.2 percent.4 percent white Black oil (FO and LDO) registered a decline of 16. The state-owned Oil and Gas Development Corporation (OGDC) was the most important player in Pakistan’s oil industry.

transport etc. Non Fuel Retail 8. Change initiators may face the considerable risk in the organization. Gaseous Fuels 3. Faisal Marine Oil Services (PVT) Limited. Peshawar. Islamabad. Pasni and Sialkot. They are the ones constantly seeking change to make things better. Maritime Security Agency. Chemicals CHANGE ROLES IN PAKISTAN STATE OIL COMPANY LIMITED Change Initiator: Change initiator is a person who identifies the need and vision for change and champions the change. Karachi. and finance (7 years) in Pakistan and overseas. Kirmani joined state oil as Deputy Managing Director. Turbat. We also provide jet fuel into-plane refueling facilities at 9 airports of Pakistan i. where PSO has developed consumer outlets for timely refueling of their fleets. Moreover we cater to the fuel requirements of Pakistan Navy.PSO also supplies fuel to industrial units like textile. marketing in April 1999 and took over as Managing Director in July 2001. our industrial consumer base includes prestigious entities like the Presidency and Prime Minster Secretariat. operations (10 years).e. Faisalabad. Product Prices 9. Karachi Port Trust. Alternate Fuel 4. We also supply fuel to ship at Karachi port. Lubricants 6. His first assignment. Quality Assurance 10. 8 . Retails Fuels 2. Korangi Fish Harbour and Qasim. PNSC. which spanned almost three decades from August 1969 to December 1998 was with a multinational oil company of which he became the fist Pakistani oil company director in 1991. Who became the CEO of the PSO and his name was Tariq Kirmani. In PSO change initiator was the Managing Director. cement. Furthermore PSO also serve the fuel needs of both national and international air carriers. Lahore. He held senior level management position in marketing (15 years). Aviation and Marine 7. agriculture. Following are the major products and services of PSO: 1. Cards 5.

The overall performance of the company had been declining before the year 2004. Often the person who has to change his or her behaviors to ensure the change is effective. Change Facilitator: The person who assist initiators. Instead. it developed the system on its own with corporate planning playing a key role. PSO did not rely on external consultants. In PSO change recipients are the employees. They identify process and content change issues and help resolve these. foster support. In PSO change implementers were both senior and middle managers. they were reluctant to accept change in status quo. Both committees met on weekly basis. nurturing support. The parchi system and small slips of paper containing external political or social recommendations had become the operational norm for both vacancy filling and career advancement. implementers. It was unable to undertake short and long term business planning supported by a proper capital budgeting system. This approach had led to manpower redundancy in various functional areas and at different levels. and recipients with the change management process.Change Implementer: The person who has the responsibility for making certain change happens. They will find guidance in creating and increasing the need for the changes that change initiators are demanding. PSO uses old technology in its business processes. 9 . and most of the employees had been working in PSO for a long time. They will find tools for organizational diagnosis and for identifying and working with key stakeholders. Its performance is so poor as compare to its major competitors (SHELL). On the other hand the Executive committee was much larger forum created for the purpose of internal communication and also to provide executive the opportunity to express their concerns of company operations which affected its performance. Change Recipient: The person who is affected by the change. and alleviating resistance. charting the path forward. There was high political influence in selection of candidate and political leaders involved in employee promotions. There was no market and research function. and provide other participants with guidance and counsel. In order to develop a new social and organizational architecture and a system infrastructure. The management committee was a smaller body and reviewed strategic issues and performance. Need for the change: PSO was loosing its market share due to lack of sound business model to follow. alleviate resistance.

Managers have to take decisions and they require peaceful environment in the office for that but in the presence of these workers. The overall performance of the company before the year 2000 had been sliding downwards. Although it is good to adopt equality principles but the non-managerial staff creates hustle-bustle and lots of disturbance in the office which creates problem for the managerial staff. the managerial and non-managerial staff is seated in the same office hall. sitting in the same office and residing at the same place. Internally it had no sound business model to undertake short and long term business planning supported by proper capital budgeting system.PROBLEM IDENTIFICATION:     Pakistan State Oil was losing its market share. CONCEPT OF EQUALITY:Mangers at Pakistan State Oil told that as a result of intervention. This approach. managers cannot work properly which is a loss to the company. Quality of its products was continuously declining. Shell earned a big name in quality. Rising prices in the international market. Pakistan State Oil. the top down approach was used which created many difficulties for employees and management as well. 10 . while seemingly faster. they are given equality and they started to eat in the same cafe. PROBLEMS AFTER IMPLEMENTATION OF INTERVENTION AND REVITALIZING STRETEGIES:TOP DOWN APPROACH:Leaders are rather fast they emphasis is on speed and action. often faces problems in implementation because of resistance from managers and employees resentful of change being forced on them by their superiors.

Mr. HIGH TURNOVER:Turnover rate at Pakistan State Oil is high due to lack of facilities provided to the permanent employees.The situation is opposite if we see it with perspective of customers as well as managers. The salaries at Pakistan State Oil are not up to that level which competitors like Shell and Caltex are paying because to cut down the expenditures. Customer’s complaint that the attendants at pumps of Pakistan State Oil are not well-trained and they do not know how to deal with the customers. showing the inefficiency of change policy. They are in haste and try to send customer away as soon as possible. A senior manager at Pakistan State Oil told that at first employees were given excellent medical facilities and other allowances and the parents of employees were also entitled for the medical facilities but now theses facilities have been reduced to cut down the cost of company similarly we are paid less at Pakistan State Oil as compared to other competitive organizations that’s why often the young managers find better opportunities and leave the organization which lead to high cost. Kirmani ordered to cut down salaries as well as allowances of employees at Pakistan State Oil. They first check the meter and then put the fuel . The revitalization in Pakistan State Oil was done with a purpose of making Pakistan State Oil a customer focused organization but this purpose still seems to be unachieved. SALARIES ARE NOT UP:The employees are also not fully satisfied with the intervention process. 11 . On the other hand managers at Pakistan State Oil claim that the attendants are well trained and we properly educate them how to deal with customers.DISSATISFIED CUSTOMERS AND EMPLOYEES:Customers at Pakistan State Oil are still dissatisfied with the services provided at Pakistan State Oil.

The change initiator should unfreeze their thoughts and approaches.    Unfreeze Change Refreeze Unfreeze Change Refreeze Unfreezing: Unfreezing focus on the need to dislodge the beliefs and assumption required to participate in the change and engage in systematic alteration of status quo. System and structures. When this unfreezing happened the system and people who are embedded in those systems become susceptible to change. The attitude and beliefs should be unfreezing by the change initiator. The attitude of the senior corporate citizens was that "since we have always done our work like this. Employees have pessimist approach they are not change implementers they usually maintain their own comfort zones. The unfreezing process might occur due to some crises. Kirmani take steps to develop optimist approach in them. the old approach of the company was based on historical budget lines and they are satisfy with the old approach. The integration and interdependence of systems and people require us to think about the unfreezing of the organizational system as a whole. Some top managers talk about the creating a crises to develop a sense of urgency around changes. He describes the three simple steps of change.   12 . we still continue this way. Unfreezing step in PSO:   Reducing the forces that are striving to make the status quo Like Middle managers of PSO were totally opposite to Kirmani thoughts according to them.Lewins model of change: Kurt lewin was the person who wrote about the problem of how to bring about change about 60 years ago. beliefs and habits become fluid and thus can shift easier.

Keeping in view of these problems Mr. Change in PSO : The manager now accept that there is a need to improve the specific system that indicates that rooms are ready means attitude. Quality of its products was continuously declining All these problems are facing by the PSO. system responsibility and shedding the old one. Technical staff has separate department and non managerial staff have separate working area.  Internally they had no sound business model to undertake short and long term business planning supported by proper capital budgeting system. For this purpose strategy was made to do departmentalization. Change: The change process would be reasonably complex. It is a new state of process.Kirmani the change initiator unfreezes organizational process and reducing the forces that are striving to make the status quo. The old capital budgeting system was antiquated and did not provide any meaningful information for quality decisions. They have not a customer friendly environment for this they bring a change to make their organization more customer oriented and consumer friendly. Pakistan State Oil is developing environment friendly products which emit less smoke. Non managerial and technical staff all is sitting together due to this there was huge hustle and bustle everywhere. It had no sound business model to undertake short or long term business planning supported by a proper capital budgeting system. In this phase there would be considerable uncertainty Employee may see the opportunity to improve what is being proposed and make suggestion regarding those improvements. Internally it had very ineffective environment for all level of employees because of that the productivity level of employees was very low. For the 13 . beliefs and assumptions are now unfreeze and they are ready for change. involving the number of people and systems. structure. contracts with United Bank Limited and Pizza Hut are in progress. Develop new strategy.

Usually planned changes in structures and roles may be seen as decreasing the power and influence of informal groups that may react in complex ways to resist change. With this stability comes freezing As the new processes. For this Mr. New business Plan: Strategy Analysis Strategy development Strategy implement Annual corporate business plan Refreezing: Once the changes are designed and implemented. procedures and behaviors become the new “normal” practices of the organization. This helped Pakistan State Oil in designing a new business model which would be underpinned by best management practices.purpose of changing the environment of Pakistan State Oil it was recognized by the upper management that without developing a sound framework of strategic business planning and capital budgeting etc no meaningful change would be possible. 14 .Kirmani hired best professional expertise to lead this function. employees will need to adapt to those changes and develop new patterns and habits. The system settles in to a new set of balances and relative stability.

CHARACTERISTICS OF GOOD LEADERSHIP:1. and get excited about the future possibilities. New strategic business model which is given by Mr. 3. They create the environment in which people can succeed. structures assumptions habits processes and so on that become interconnected and independent overtime. They seek innovation and improvement in the organization. Karmani a Leader set the benchmark by creating standards of excellence and then demonstrates these standards in their own behavior and thus establishing an example for others to follow. Mr. 2. More customer friendly environment would be adopted to have more satisfied customer.Change in PSO: The organization is a complex web of systems. relationships. to take risks and to accept the inevitable failures as part of the learning 15 . Challenging the Way Things Are Leaders are challenging and seek out opportunities to challenge and change the status quo. Creating a Shared Vision:- Leaders have a clear and passionately held vision of what the changed organization can become. But still some employees shoed resistance. Showing the Way:- Leaders define and establish principles about the way people should be treated and the way goals should be pursued. are prepared to experiment. He has the skills and energy to enthuse and inspire people to share his vision. that become an opportunity to create karmani wants his organization a innovative and dynamic energy company and also want deliver value to unsatisfied customers. The new culture and beliefs set by the change initiator should be adopted by the all employees of the organization.Kirmani refreeze into organization culture values beliefs and their environment.

All of these are qualities and practices that make up the leadership characteristics for successful change management initiatives. As they create urgency for the complacent workers. often faces problems in implementation because of resistance from managers and employees angry of change being forced on them by their seniors. 6. 16 . But they also acknowledge their people’s achievements and celebrate team and short term goals and individual accomplishments to. As we see that the change of equality in the working environment .experience. Empowering and Encouraging People to Act:- Leaders are enablers and empower people by involving them and believing in them. They create mutual respect and trust and in so doing motivate their people to extraordinary effort and achievement. sitting in the same office and residing at the same place. they are given equality and they started to eat in the same cafe. 4. Leaders should recognize that the resistance to change:Resistance may become a problem rather than an opportunity. and is so doing they make their people felt good about themselves and the workers get highly motivated to. So while seemingly faster. Addressing the Emotional Dimension:- Leaders know that extraordinary achievement in an organization is very hard work. 5. Although it is good to adopt equality principles but the nonmanagerial staff creates hustle-bustle and lots of disturbance in the office which creates problem for the managerial staff. They also know that emotional dimension is extremely important. As they train their staff to the best of their efforts.The managerial and non-managerial staff is seated in the same office hall.

suppliers and shareholders so they have to face problems from their sides. Here they need to eliminate resistance with their old employees and to get rid of status quo. income. NEED TO RAISE THE URGENCY LEVEL WAS FELT BUT NOT PROPERLY FOLLOWED: Upper management recognizes that they need strong business planning and capital budgeting system. they use to set narrow functional goals. they were not using external consultants so honest discussion was less in the management meetings. There was no regular interaction with unsatisfied customers.PSO also facing problem with its dealers transporters as well as with its customers. like they create crisis by announcing financial losses and decreasing market share. They felt urgency for change which basically gives more emphasis on corporate level. productivity and do lot of emphasis on customer satisfaction but on the other hand their managers were not agree with the customer complaints. Old employees were quite complacent because of following reasons     External consultants were not involved so internal measurement system focuses on wrong performance index. low confrontation culture 17 . So this bad scenario compels PSO to bring change in its organization. set goals for increasing revenue. Lack of sufficient performance feedback from external sources Low performance standards Kill the messenger of bad news.ANALYSIS AND RECOMMENDATIONS As PSO was losing its market share and having ineffective working environment which leads to low productivity and facing so many other problems like they were not having sound business model so their quality of product keeps on decreasing day by day also facing competition from competitors. For this purpose they have to inject and communicate need and urgency for change to each and every employee. In its meetings they bombard their employees with information on future opportunities but as old employees resist changing so many of them do not listen carefully. Need to raise the urgency level was felt but not properly followed.

memos and news paper. Though in case of Pakistan State Oil the change was quick but the employees were not given the time to float their ideas and to cope up with change which led to resistance from employees. Now in case of Pakistan State Oil the only problem was that the change was imposed upon people. as Pakistan State Oil had many old middle managers who resisted it. In the light of KOTTER’s model they can empower their employs to effect change by following ways      Communicate a sensible vision to employees Make structure compatible with the vision Provide the training employees need Align information and personnel system with the vision Confront supervisors who undercut needed change 18 . Vision was also not properly communicated.FAILURE IN COMMUNICATION: Only those organizations conduct successful change processes which fully involve all the employees in change process through proper communication at proper time. Affective communication of vision must involved following elements like       It should be very simple and understandable Should be precise Big meetings and small. formal and informal interaction Repeat the vision again and again If any inconsistency happen then explain its reason Two way communication is always better than one way communication BARRIERS TO EMPOWERMENT It is futile to make the change if the employees are not with you. But it was their right to resist because they were not being involved in the change process. Employees should also be given enough time to change. they were not properly empowered.

000/. positive feedback built morale and motivation. so it needs to keep its official expenses low which are de motivating employees. It will reduce the problems of employees and they would be better able to get the solution of their problems ABSENCE OF SHORT TERM WINS: In PSO there was absence of short term wins so employees were not motivated as much. 40. May 05. During interview with the senior officer at Pakistan State Oil we came to know that (Personal communication. Similarly taxes are deducted at gross salary due to which take home income is low here.000/. The local administrator evaluates the employees in the office and report to HR manager at Karachi.but at Pakistan State Oil they get almost Rs.which is a big difference that is why turnover rate is high here. Human Resource Department is important in each and every office or division of the company in every city but things are different at Pakistan State Oil. Pakistan State Oil is in the development phase of its some of the products. ethanol is used in place of fuel in vehicles and cars. In Brazil. the employees are not satisfied with this thing because they complaint that for every problem related to Human Resource we have to write to the manager at head office in Karachi. Pakistan State Oil being the largest company of oil in Pakistan should also develop such alternative for people so that people could get high quality products at reasonably low prices. This is not an effective strategy. 19 . Employees at Pakistan State Oil are dissatisfied due to comparatively low salaries. They also should be rewarded for their achievements because after a lot of hard work. 20. Human Resource Department should exist in each and every office of the company. people would greatly respond to this new product which can further help it in rising its sales. 2008) engineers at Shell and Caltex are getting starting salary of Rs. ALTERNATIVE FOR FUEL We can see the inflationary trend in the market and the prices of oil are very high in the international market nowadays. As there is a need.HRM DEPARTMENT AT EVERY OFFICE: Human resources are a great asset for any company and companies undertake effective measures to look after their greatest asset. People prefer to use alternatives of petrol and other fuels such as diesel which could be of low price. market share and profitability.

20 .

Sign up to vote on this title
UsefulNot useful

Master Your Semester with Scribd & The New York Times

Special offer: Get 4 months of Scribd and The New York Times for just $1.87 per week!

Master Your Semester with a Special Offer from Scribd & The New York Times