! !" #" $" % !

"
Faiz Shah and Ambreen Waheed

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There would be no compromise on ethics

Tariq Kirmani, Managing Director, Pakistan State Oil

It was end-November 2002, and Tariq Kirmani, Managing Director of Pakistan

State Oil (PSO)the countrys sole government-owned, public-listed oil
marketing company (OMC)joined the queue for the elevator to his top floor
office. During the Management Committee meeting the day before, one of his
division heads had commented on what lay ahead as a new civilian government
took over after three years of military rule, wonder when the first political
appointee shows up here!. Casual though the remark was, it worried Kirmani.
He looked back at the past three years during which he had been able without
political interference to usher in many major changes at PSO.
Two weeks ago, accepting a national corporate performance award, Kirmani
had declared, The changes at PSO are not extraordinary, and such changes
should have been made years ago. We have implemented only what is done
by good companies. But, now, at his desk, he wondered whether the
organizational change effort that had consumed him and his team for the past
three years was going to fall victim to political pressures. After all, PSO was
government-owned, and sudden policy changes were nothing new to the
countrys convoluted political landscape.
Joining the company in 1999 as Deputy Managing Director to spearhead
the companys new vision marketing strategy, Kirmani had become actively
!"#
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involved in efforts to shake PSO out of the decades of stolidity. In February

2000, the Ministry of Petroleum had finally reacted to PSOs slipping fortunes
and poor image by re-constituting its Board of Management, inducting six
corporate leaders who understood and supported the need for a sweeping
change as the company emerged into a de-regulated business environment.
When he took over as the chief executive in August 2001, following the tragic
death of his predecessor, PSO was already on its way to a major organizational
renewal programme.
Kirmani and his teams efforts had already started showing results. Profits
as a proportion of revenues had gone to 2.82% in 2002 from 1.16% ten years
ago, even as capital expenditure went from 0.45% of revenue in 1992 to 0.78%
in 2002. Productivity showed similar improvement, standing at 41.4 barrels
sold per employee compared to 29.9 in the early nineties. Defaults on the
receivables were down by Rs. 1.7 billion, and, for the first time in years PSO
seemed poised to arrest decline in its market share. Only in the last month, the
government had confirmed its intent to privatize the company, calling a pre-
bid meeting in January 2003. As share price shot up from a steady Rs.79 through
2002 to over Rs. 200, Shaukat Aziz, the federal Minister for Finance, had referred
to PSO as an example of a public sector company that can declare profits like
private sector companies.

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The 1970 elections led to a socialist government that adopted a policy of

nationalizing private enterprises and handling them over to the government-
appointed managements. As a consequence, multinational oil companies chose
either to withdraw from the country or to re-organize under the nationalization
rules. PSO came into being in 1976 following two separate pieces of legislation
the Marketing of Petroleum Products (Federal Control) Act 1974 and the Esso
Undertakings (Vesting) Act 1976that brought together Essos interests in
Pakistan with those of Pakistan National Oil Limited and Premier Oil Company
Limited, into a new Federal Government-controlled public company with other
nationalized banks and funds as major shareholders.
With the federal Minister for Petroleum and Natural Resources chairing
PSOs Board of Management comprising government officials, the organization
was susceptible to manipulation as an extension of the countrys myriad
mechanisms of political patronage. Traditionally, product pricing and placement
were determined under the government guidelines, independent of supply
and demand, and resource allocations were made more in line with the political
need than business imperatives.
On the business side, PSO had the countrys most extensive storage,
distribution, and retail network for such common staples as motor gasoline,
diesel, furnace oil, petro-chemicals, liquefied petroleum gas, and compressed
natural gas. Other state-owned enterprises such as the countrys electric power
authority, the national airline, railway and shipping lines, and numerous
 7"-%* =>6 +"$'-&"(* 9&"&%* ?'06* @(* A'&;* &;%* B%A !"$

industrial units provided a stable and predictable customer base. Having no

price-competition and unmatched outreach meant that PSO could claim almost
70% of the market share without any real threat. The remaining 30% represented
the segment of private customers who could exercise a choice between the two
competing brands still in active PakistanShell and Caltex. Yet, until 199091,
just before steps were taken to de-regulate the national economy gradually,
PSOs after-tax profits hovered at around 11.5% of sales revenue.
By the mid-eighties, the nationalization policy had begun to unravel across
the entire spectrum of state enterprises, and the term itself came to symbolize
a flabby, top-down, unprofitable organization. PSO was no different. For a
marketing company, PSOs product portfolio had seen minimal change for
over two decades. The experienced professional core that PSO had inherited
from its multinational parent in 1976 gradually became diluted with an expanding
cadre of political inductees. With a limited exposure to business trends, lack of
stimulation and diminished professional challenge, the staff began showing a
slide in motivation and productivity. It was no surprise, therefore, that PSO
began to exhibit a striking absence of the service culture so necessary for retail
operations. Among other things, a major contributor to this was PSOs self-
image as an extension of government bureaucracy. Even though its balance
sheet consistently showed gains, mainly as a result of expanding demand and
lack of market pressures, PSO progressively came to be seen as overstaffed,
under-productive, and vulnerable to political manipulation.

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By the early nineties, the government had begun de-regulating the petroleum
sector, taking steps to gradually dissociate itself from price controls and state
monopoly mechanisms. However, the arrival of a military regime in October
1999 quite possibly accelerated de-regulation in an unexpected manner. With
politicians barred from the office until the end of 2002 with Supreme Court
approval, the military leadership persuaded the recognized experts in their
respective fields to assume cabinet positions. The Ministry of Petroleum &
Natural Resources came under Usman Aminuddina career OMC professional
who seized the opportunity to push ahead the governments de-regulation
policy and nudge PSO towards independence.
By March 2002, the government has revised the retail margins for
compensating OMCs and their retailers for internationally linked price-
mechanisms and, thus, empowered an inter-agency advisory committee the
mandate to set petroleum prices every two weeks. This process, continuing up
to the formation of an independent Oil & Gas Regulatory Authority in 2002,
encouraged private sector OMCs to compete with PSO. Caltex and Shell upgraded
their marketing operations and over the years were joined by the multinationals
like Total, and national companies, such as, Attock Petroleum. Suddenly, just
as the country was poised to return to the parliamentary from government,
PSO was confronting first business challenge since the governments policy of
nationalization was adopted.
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Market demand for petroleum products in Pakistan had remained more

or less stableat around 18 million tons since 1999. However, partly because
of volatile price fluctuations and partly due to post9/111 military operations
in Afghanistan and tension along the countrys borders, the end of 2001 saw
a 9.1% down-turn in the domestic consumption of petroleum products. In its
2002 annual report, PSO reported that the overall consumption was down by
4% over the preceding year, which had been growing at a Compound Annual
Growth Rate (CAGR) of 7% over the last two decades.
With the growing number of OMCs competing in a fairly limited, if not
declining, consumer market without the freedom to compete on price alone, it
became obvious that variables such as product placement, product differentiation,
brand image, and customer service would become the battleground. PSOs
infrastructure, despite its extensive nation-wide coverage, was aging, and it
did not compare favourably the competitions modern installations and well-
appointed facilities. Customers driving up to a Shell or Caltex station were met
by uniformed staff who checked the oil and cleaned the windscreens. In addition,
while its competitors sited facilities in line with business potential, PSO
maintained retail outlets at places that were not necessarily profitable but in
line with its national mandate. PSOs packaging and presentation remained
unchanged at a time when the competition brought in eye-catching displays
and advertising tools such as gift schemes and incentives. And, as if all this
was not enough to further entrench PSOs government persona among its
customers, allegations of meter-manipulation, adulteration and spurious product
further marred consumer perception.
As de-regulation proceeded across the various elements of the petroleum
business, oil imports were made free of government import control, and the
refinery capacity promised to increase from 6.2 million tons in 1998 to
9.5 million tons by 2000, PSOs competition was all set to exploit its weaknesses.
It appeared that PSO was not adequately equipped to perform at par with its
competition in the newly open petroleum retail market, and it was likely to see
more and more erosion into its market share. In 2002, the companys first ever
corporate plan introspected that Maintaining market leadership position and
achieving a tangible and preferable business advantage in a highly competitive,
turbulent, and uncertain business environment is the major challenge faced by
PSO.

FAD6?/ 9G/ (9<H:AI6=I@

Just before the new Board had taken over in 2000, PSO had begun losing
market share to its multinational competitorsShell and Caltex. From a composite
share of 61% in 1996, PSO had slipped to 46% in 2000. The biggest loss was in
the lubricants segment, where PSOs share slipped from 63% in 1996 to 38% in

1
9/11: on the September 11, 2001, the twin towers of New York were demolished by the terrorists.
 7"-%* =>6 +"$'-&"(* 9&"&%* ?'06* @(* A'&;* &;%* B%A !"%

2000. The motor gasoline and diesel segments showed similar slippagefrom
47% and 73% to 39% and 61% respectively.
Quite apart from the pressure of effective competition and PSOs insulated
niche as a state enterprise, what added to its vulnerability was a huge and
spread-out infrastructure, comparatively lower awareness of customer needs,
and an internal culture of complacency. In addition, PSO appeared to lag behind
its competition when it came to crucial areas such as employee motivation and
productivity, health, safety and environmental standards, and merit-based
recruitment and career tracks. Each of these variables directly affected the
parameters of retail success. PSO clearly needed to move into a more aggressive
service-orientation with a renewed marketing thrust. But, before that could be
done, it had to overcome five fundamental challengesas identified by senior
managers at the timeeach contributing to the next and compounding PSOs
competitiveness dilemma.

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a. Political influence on organizational decisions causing loss of internal
accountability and morale;
b. Inadequate strategic planning, operational opaqueness, poor documentation
and review systems;
c. Low supply chain integrity and skewed relationships between PSO and
its sub-contractors/outlets;
d. Non-service attitude and no role models to change from supply-led to
employee driven company;
e. Poor consumer image and brand recognition giving marketing advantage
to competitor brands (Table 26.1).
First, on the list was extra-organizational influence on PSOs decision-making,
thus making it difficult for the organization to keep its business-orientation
and break out of its supply-driven ethos. Contributing to this was the composition

TABLE 26.1 Transformation Challenge

Issues/areas of concern Transformation/solution

Political influence on organizational Re-organized governance structure

decisions
Operational opaqueness and poor New corporate planning and review system
documentation
Low supply chain integrity and Direct, collaborative company oversight
skewed relationships
Non-service attitude and no role models Upgraded training and leadership by example
Poor consumer image and brand recognition New vision livery and customer approach
Source: Interviews with PSO Management.
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of the board, which was composed entirely of the representatives from

government ministries and state institutions. Political appointments to both
managerial and labour force cadres were common, as was the influence in
selecting dealers and service providers. This led to a general decline in merit
and internal accountability, thus rendering the management deficient in key
decision areas.
Second, a demonstrable inadequacy in documenting various operations
lead to process-level opaqueness that led to decision-making unsupported by
reliable information. As a consequence, planned interventions often gave way
to spot decisions leading to a persistent crisis management mindset, lack of
co-ordination in organization-level planning and less than necessary emphasis
on strategic elements of business. Instances of the lack of initiative in some
cases and the exceeding authority in others were compounded by poorly
implemented system of rewards and controls.
Third, an overall lack of transparency fed into the supply chain integrity.
Being dependent on a host of sub-contracted partners for delivering, storing
and selling products across its widespread facilities, PSO depended on the
thorough implementation of stringent operational controls. These partners
ranging across cartage contractors, dealerships, and retail outlet ownersoften
complained that PSO managers applied these controls selectively. At the same
time, the sub-contractors too had opportunities to exploit gaps in PSOs system
of supply chain checks. As a result, allegations of adulteration, meter doctoring,
spurious product sales, and corruption were often made with regards to PSOs
supply chain, thus skewing relationships with sub-contractors unfavourably.
Fourth, and reportedly quite uniformly prevalent was a general non-service
attitude at PSOs customer interface. Retail outlets were shoddy, offering routinely
bland product and inconsistent service. This attitude was said to emanate from
PSO itself, where the staff considered themselves government officials and,
without adequate motivation, they preferred to attain individual influence over
the dealers through various ways. There were instances of unpaid dealer invoices
going back years, with the result that subcontractors had a little faith in PSO
as a partner, and they often took advantage of the relationship when they
could. On the other hand, in the absence of role models that could set standards
for professionalism, integrity and accountability at PSO, the subcontractors
were treated as malefactors who were required to be kept on a tight leash.
Fifth, all of the above combined to create a relatively poor consumer
image for PSO, especially since de-regulation provided customers with market
savvy alternatives. Despite the companys size and market coverage, PSO had
not been able to generate either brand recognition or consumer affinity, which,
in turn, further reinforced each of the issues above.

#8A=?G98<A7E9=J*9:;7E9=?
a. Revamped governance structure and strong emphasis on personal and
process integrity top down;
 7"-%* =>6 +"$'-&"(* 9&"&%* ?'06* @(* A'&;* &;%* B%A !""

b. New planning and review system and clear process documentation to

track corporate performance;
c. Fair, direct and collaborative oversight of sub-contractors under clear
guidelines applied uniformly;
d. Upgraded HRD and leadership by example models for a more educated
and empowered workforce;
e. New vision livery and customer focus within a well-planned marketing
thrust (Table 26.1).

#B6/ $9;76/ 79/ (9<H67E7EK6=6??

The change began in February 2000 with the induction of a new management
board comprising three government representatives and six private sector
professionals who have got a track record of corporate leadership. In a departure
from the past, both the Chairman and the Managing Director were from the
private sector. The pattern for assembling the new management team was set,
blending the mix of PSOs long-serving managers with new recruits with diverse
skills from outside the company.
Corporate policies needed revision for accommodating the revising
emerging priorities in ethical business standards, health and occupational safety,
environmental management, gender relations and corporate governance. Recent
legislation on corporate accountability, industrial relations and environmental
pollution posed new disclosure requirements. In an environment of intensifying
competition and changing rules of business, PSO had to come up with an
effective strategic response to the actual and potential challenges in all aspects
of business. In its first ever corporate plan prepared in 2002, PSOs vision and
values appeared as corporate objectives and strategies towards ensuring
sustainable competitive advantage, modernizing operations. This was the first
time that PSO articulated that the Health and Safety of PSOs employees and
all those likely to be affected by the companys operations is one of the basic
corporate objectives and as a priority it ranks equally with market share and
profit. The situation clearly needed a revamped organization and major
investments in human capital and technology.
Renewed systems and procedures were introduced within a matrix
management structure to make decision-making more responsive and
transparent. The company operations were organized into independent strategic
business units (SBUs)each with clearly defined roles and accountability
mechanisms. Support functions such as finance, legal, IT, etc. were aligned
with corporate-level control and monitoring systems coordinated by a corporate
planning department. Explaining his task of helping develop and install
background systems for documenting process-level data and analyzing them
for decision-support at the highest level, Amjad Parvez Janjua, Head of Corporate
Planning, said, Business process reengineering, rightsizing, outsourcing,
employee empowerment, flattened organization, and distributed processing
are changing the way businesses operate. These changes will have profound
implications for the management and operational control structures at PSO.
!"' !"#$%&'()* +#",&',%-* '(* .%/%012'()* 3,1(1456* 7"-%-* 8#14* 91:&;* <-'"

By November 2002, eight out of the ten General Managers were new to
PSO, who have come mostly from multinational companies, and often with
overseas experience. A voluntary separation scheme (VSS) allowed 749 staff to
opt out of PSO just as the managerial cadre was expanded to 322 with better
educated and motivated younger managers, brought in at competitive pay to
give management depth to PSO in solving issues identified above. From 454
reported in 1999, the executive positions increased upto 740 in 2002, thus bringing
along a 42% cumulative increase in remuneration over the same period. Echoing
his colleagues sentiments, Rustum Mavlavala, winner of the Shaukat Mirza
Performance Award, said PSO is the only public sector entity that is at par
with the multinationals.
Meanwhile, automation of sales, operations, and planning functions as
part of an organization-wide Enterprise Resource Planning (ERP) system linked
PSOs hub offices to 600 retail outlets through a web-based MIS, minimizing
information distortion, and enhancing the quality of interface across the critical
parts of the organization. An unexpected image dividend presented itself when
these retail outlets began offering public internet access by using their new
technology infrastructure. In a country aggressively seeking recognition as an
Information Technology centre, this was seen as a major public service. The
Federal Minister for Science and Technology, Dr. Attaur Rehman, said, This
is a major service to Pakistan for which the country will forever be grateful.
Other similar initiatives that attracted customer attention were road safety
messages, sports sponsorships, and a customer loyalty programme.
PSOs burgeoning confidence in itself was increasingly visible in its
advertisements. From appeals to citizens to buy national, messages shifted
emphasis on service, quality and competitiveness. A toll-free customer hotline
offering 24-hour access promised that each complaint would be reviewed by
the MD himself. The external message that PSO was becoming a more
approachable, more responsive company, was reinforced by encouraging a
more friendly culture internally. Traditions that segregated the management
from the staff such as executive dining rooms and reserved elevators gave way
to common cafeterias, open plan offices, and everyone from the MD down
lining up to swipe their cards and share an elevator. Individuals all across the
organization seemed enthused by their contribution to the change at PSO. Jalil-
ur-Rehman Tarin, Head of Finance, said I have enjoyed the last two years at
PSO more than any work I have done over the past 30 years, working in
Pakistan and the UK for corporations bigger than PSO. Usman Laath, the
Workers Union President, too, had words of praise for the direction the new
management was taking. Together, all this added up to better morale, greater
efficiencies, a more visible brand identity, and a healthier bottom-line.
In August 2002, JP Morgan reported, Over the past year, significant
progress has been made towards putting in place the basic framework for
corporate reform in line with the modern concepts and practices. At last, it
seemed that PSO was well on its way towards a culture of merit and professional
integrity to match its new corporate image. It appeared confident in its ability
to come up with marketing and brand management strategies in response to
 7"-%* =>6 +"$'-&"(* 9&"&%* ?'06* @(* A'&;* &;%* B%A !"(

its competition. In an atmosphere of renewed employee loyalty, even outsiders

were impressed by PSOs transformation efforts. In the words of Jeremy Brown,
General Manager of BP middle-east, During the past year, Pakistan State Oil
has done something short of a miracle.

#B6/ &E:6<<A
Launching the years annual report, Kirmani had said only a few weeks ago,
Despite the fact that there was a major shortfall in sales revenue, the companys
performance remained good because among other reasons expenditures have
been cut down. The next year will be tougher as we expect strong competition
from our main rivals who will fight back.
But, with the new government just in, what were his options to ensure
that PSOs renewed vision would not suffer a setback as a result of external
pressures? Would his painstakingly cultivated example of integrity and ethical
behaviour continue to retain support within the organization? Would PSO
employees, now thriving in a competitive merit-based culture, be able to resist
an onslaught of political appointees? Would the supply-chain elements such as
contract carriers and retail outlet operators resist lobbying against PSOs recent
business policies? Would the media prove an ally in supporting PSOs ethical
posture? And, finally, what would be the consequences of the government
announcement to privatize PSO in early 2003?

)*%L*/ M!*!%"/ *#-#202"#

a. Market leader providing the highest quality petroleum products and

services to its customers.
b. Professionally trained high quality motivated workforce working as a
team in all kinds of environment which recognize and reward
performance.
c. Innovation and creativity and provision for personal growth and
development.
d. Lowest cost supplier with assured access to long-term supplies.
e. Sustained growth in earning in real terms.
f. Highly ethical company, good corporate citizen.

$2M!2F/ N'2*#!%"*

26.1 Vulnerability to political influence can harm a companys productivity.

How well was PSO able to resist? Is it advisable to shun such political
association in patronage cultures where politics may be involved at all
levels of decision-making?
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26.2 Change whether subtle or abrupt relies on change agents who characteri-
stically apply approaches ranging from shock-tactics to dogged persistence.
How has PSO managed to bring a change in its long-term vision, organi-
zational culture, corporate image, and productivity since Kirmanis arrival?
26.3 PSOs senior managers identified five areas of concern. What other issues
could have been flagged? How would you prioritize them and why?
26.4 Imagine yourself as a competitor of PSO just as it has began its journey
of transformation. What loopholes can you identify in PSOs approach?
What should be your strategy in the face of PSOs changing profile? What
do you think PSO would do to counter your strategy?
26.5 Privatization is often adopted in the developing world as a tool to revive
inefficient state-run enterprises. Does PSO offer an example of how
nationalized companies can prepare themselves for privatization. What
lessons do you learn from the case? Which of these lessons would remain
relevant for companies in other sectors?
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TABLE A26.1 Summary of Shareholding as on October 21, 2002

Sl. no Category Shares %

1. Federal government 36,463,607 25.51

2. National investment trust/investment corp. of Pakistan 39,366,174 27.55
3. State-controlled financial and insurance organizations 9,146,033 6.39
4. Foreign investors 5,601,936 3.92
5. Others/joint stock companies 52,354,668 36.63
Total 142,932,418 100.00

Source: PSO Corporate Planning Department.

TABLE A26.2 Market Share

Market share % 1996 1997 1998 1999 2000 2001 2002

Lubes 63 57 47 45 38 38 39
Gasoline 47 45 44 41 39 40 40
Diesel 73 71 69 66 61 60 59
Composite ave. 61 58 53 51 46 46 46

Source: PSO Annual Report, 2002.

 TABLE A26.3 PSO Performance (19912002)
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2002 2001 2000 1999 1998 1997 1996 1995 1994 1993 1992 1991

Sales revenue 182,323 169,726 135,040 115,636 121,345 109,508 80,563 66,012 64,333 50,513 45,603 40,181
Marketing and
administration 1,411 1,671 1,452 1,153 1,155 1,143 1,000 595 616 534 406 305
Profit before tax 5,137 3,451 3,581 3,356 2,826 3,746 2,563 1,681 1,176 772 527 451
Profit after tax 3,188 2,251 2,231 2,671 1,846 2,046 1,498 1,041 696 428 319 232
Capital expenditure 1,430 1,254 967 397 408 821 921 462 322 365 207 139
Shareholder equity 11,253 9,808 8,986 8,184 6,586 5,533 4,149 3,052 2,255 1,748 1,477 1,283
Share value
(rupee per share) 79 69 63 69 66 67 65 62 60 56 56 56
Sales volume
C
(million tons) 11.48 12.6 12.7 12.1 12.7 11.9 11.6 10.6 10.2 9.2 8.4 7.3
H
Barrels sold per A
employee 41.4 33.6 33.9 31.7 N 32.3 28 28.3 29.9 31.6 29.9
% Revenue spent G
on mkt/adm 0.77 0.98 1.08 1.00 E 0.95 1.04 1.24 0.90 0.96 1.06 0.89 0.76
% Profit spent on
mkt/adm 44.26 74.23 65.08 43.17 62.57 55.87 66.76 57.16 88.51 124.77 127.27 131.47
% Capital exp
per revenue 0.78 0.74 0.72 0.34 0.34 0.75 1.14 0.70 0.50 0.72 0.45 0.35
% Capital exp per
profit aft. Tx 44.86 55.71 43.34 14.86 22.10 40.13 61.48 44.38 46.26 85.28 64.89 59.91
Tax paid 1,949 1,200 1,350 685 980 1,700 1,065 640 480 344 208 219
Tax as % of revenue 1.07 0.71 1.00 0.59 0.81 1.55 1.32 0.97 0.75 0.68 0.46 0.55
Tax as % of profit
before tax 37.94 34.77 37.70 20.41 34.68 45.38 41.55 38.07 40.82 44.56 39.47 48.56
!"#$%&'()* +#",&',%-* '(* .%/%012'()* 3,1(1456* 7"-%-* 8#14* 91:&;* <-'"

Revenue by sales
volume 15,881.79 13,470.32 10,633.07 9,556.69 9,554.72 9,202.35 6,945.09 6,227.55 6,307.16 5,490.54 5,428.93 5,504.25
Profit by sales volume 277.70 178.65 175.67 220.74 145.35 171.93 129.14 98.21 68.24 46.52 37.98 31.78
% Profit on revenue 2.82 2.03 2.65 2.90 2.33 3.42 3.18 2.55 1.83 1.53 1.16 1.12
Sh/holder eq. as
% of revenue 6.17 5.78 6.65 7.08 5.43 5.05 5.15 4.62 3.51 3.46 3.24 3.19

Source: PSO Annual Reports 19982002.

 7"-%* =>6 +"$'-&"(* 9&"&%* ?'06* @(* A'&;* &;%* B%A !'$

EXHIBIT A26.1 New Vision Media Message.

Source: PSO Brand Management Department.

EXHIBIT A26.2 Corporate Citizenship Media Message.

!'! !"#$%&'()* +#",&',%-* '(* .%/%012'()* 3,1(1456* 7"-%-* 8#14* 91:&;* <-'"

EXHIBIT A26.3 PSO OfficeBefore and After.

Source: PSO Corporate Planning Department.
 7"-%* =>6 +"$'-&"(* 9&"&%* ?'06* @(* A'&;* &;%* B%A !'%

EXHIBIT A26.4 PSO Office (From Inside)Before and After.

Source: PSO Corporate Planning Department.
!'& !"#$%&'()* +#",&',%-* '(* .%/%012'()* 3,1(1456* 7"-%-* 8#14* 91:&;* <-'"

EXHIBIT A26.5 PSO in TransitBefore and After.

Source: PSO Corporate Planning Department.