COLOMBO: Sri Lanka’s only privately owned liquefied petroleum gas (LPG) operator Laugfs Gas PLC has acquired a 69 percent stake in Bangladeshi LPG company Petredec Elpiji Ltd (PEL) at an investment of US $ 18.75 million.
According to a statement issued by Laugfs Gas, PEL is a dominant player in the Bangladeshi LPG industry with over 21 percent market share and operates with a modern LPG import facility in the Mongla Port area, distributing over 22,000 MT of LPG per annum through its extensive distribution network.
“With this acquisition, the growth opportunities for Laugfs Gas PLC catapults to a level that is several fold more than with the exiting local market,” the Laugfs statement noted.
“The distribution of business risk and better economies of scale in supply chain management in association with Laugfs’ maritime business, where two LPG vessels are in operation, is expected to give cutting-edge efficiencies thus propelling a growth momentum that goes beyond the domestic norms,” it added.
PEL was one of the first to enter the downstream LPG business in Bangladesh during 1997, and was later acquired by Australian energy giant Kleenheat Australia.
“We see tremendous potential for expanding LPG as a domestic and commercial energy source in Bangladesh. The country’s economy is expected to show robust growth with a 7 percent GDP growth forecasted by the IMF, signalling rising disposable income in the domestic market.
The gap between supply and demand in terms of commercial energy needs is also increasing with their natural gas reserves now depleting at a fast pace,” remarked Laugfs Group Chairman W.K.H. Wegapitiya.
“The acquisition of PEL will mark an important milestone in our global expansion plans. We will soon disclose our next move to a few other Asian markets. We are aggressively working on it; however, it is too early to disclose in detail,” he added.
With over 160 million population, Bangladesh has been identified as one of the most lucrative emerging markets in South East Asia.
The steady depletion of natural gas and the double-digit growth of LPG with CAGR of 12 percent year-on-year average, the potential for domestic and industrial LPG is estimated to be significantly large in Bangladesh.
“This acquisition comes at a time we celebrate 20 years in business, enabling us to take a leap from a mere home-grown business to a multi-national, and strengthen our energy presence across the region,” Laugfs Group Managing Director Thilak De Silva said.
The company said this acquisition with their other latest acquisition— the second LPG vessel ‘Gas Success’— will reflect in their financials through consolidations from the third quarter of the current year.
Laugfs Gas is also currently engaged in building an LPG storage facility in Hambantota.
The company commenced LPG operations in 2001, at a time when the Sri Lankan LPG market was dominated by a multinational.
