Sri Lankan company Laugfs Holdings is in the initial stages of looking into acquiring Shell's liquefied petroleum gas (LPG) business in Sri Lanka with the latter seeking to dispose its LPG operations in Europe and parts of Asia as it reviews ownership options for most of its LPG businesses worldwide.
Laugfs Chairman W.K.H. Wegapitiya told the Business Times this week that as a prudent company, Laugfs is very keen to acquire Shell's LPG business. He said an initial approach through the relevant parties has taken place.
Mr. Wegapitiya also addressed media coverage about monopolies abter Laugf's intention to acquire Shell's LPG business was made public last week. He explained that the normal market situation of supply and demand does not apply to LPG, which is a by-product of refined crude oil, because prices are linked to global crude oil prices. In Sri Lanka, prices are regulated by the Consumer Affairs Authority (CAA) but regardless of whether there is only one company or 10 companies, prices will not vary greatly because they are pegged on global prices. However, having more players could improve the quality of service.
The Ceylon Petroleum Corporation (CPC) may also make a bid for Shell's LPG business. Asked to comment, Minister of Petroleum Industries Susil Premajayantha said its upto the board of directors of the CPC on whether or not CPC should get into this business. Following businessman Harry Jayawardene's recent appointment as CPC Chairman, Mr. Premajayantha said the new board will meet shortly.
Shell said in a statement that it completed the sale of its LPG business in India in April 2010 and has confirmed its intention to sell its major shareholding in the Pakistan LPG business.