LAUGFS Gas initiating big plans for this year
LAUGFS Gas PLC is looking forward to operating its spanking new Hambantota Terminal while gearing to go public with three of its companies, and commissioning a hydro and two solar plants this year.
W.H.K. Wegapitiya
The company has established a LPG storage complex with a capacity of 30,000 metric tonnes in Hambantota Port at a cost of US$80 million and was expecting the first consignment of gas last December. The company is moving towards building an integrated regional LPG Terminal for LPG importing, re-exporting and supply to retailers in the Indian Ocean Rim. “We have just commissioned Hambantota Terminal (a little later than was expected) and the revenue it will generate will have a significant impact on the expected export target in this country,” W.H.K. Wegapitiya, Chairman, LAUGFS Gas PLC told the Business Times in an interview.
Mr. Wegapitiya anticipates that Hambantota Terminal will generate $1 billion and it will be a new export sector.
LAUGFS Gas (Bangladesh) Ltd having entered Bangladesh in 2001 is a major LPG distributor in Bangladesh, importing and distributing over 50,000 metric tonnes (MT) of LPG every year. Already with LPG down-streaming in Bangladesh, LAUGFS Gas will be using Hambantota to become the preferred supplier of LPG to that country, Mr. Wegapitiya noted. When LAUGFS Gas started it had 26 per cent market share in Bangladesh. Mr. Wegapitiya said noting that while it changes every day, now it must be below 50 per cent.
Spreading wings
The company also plans to venture to Myanmar and Kenya in East Africa to supply LPG. “We will be supplying to Myanmar within the next two months. Mombasa in Kenya is a gateway to other landlocked East African countries. We are exploring venturing to Mombasa as well. Initially we want to supply in bulk,” Mr. Wegapitiya noted adding that it will happen after the call for commercial operations of the Hambantota Terminal.
Hambantota port has dedicated two jetties for oil, gas and petroleum business. LAUGFS’ storage facility is located 3 km from the jetty connected by a pipeline.
LAUGFS Hambantota facility can receive and store refrigerated propane and butane separately or in mixed form, via very large gas carriers and pressurised vessels. The company expects to extend the capacity to 45,000 MT. The company currently operates three LNG carrying ships and expects to increase the numbers to 10 in the short-term – both owned and chartered.
LAUGFS Gas will be setting up a 2 megawatt (MW) Hydro power plant at Ginigathhena this year. They already have a 3MW Hydro plant. Mr. Wegapitiya said that this year a 2 MW solar power plant at Ambilipitiya and a 10 MW plant at Hambantota will be commissioned In addition to the 20 MW solar plant they have.
This year three LAUGFS companies will go public. Mr. Wegapitiya said that LAUGFS Leisure, LAUGFS Power and LAUGFS Eco Sri will be listing on the Colombo Stock Exchange this year.”We are now in the process of listing all three companies and awaiting regulatory approval. This will be happening soon,” Mr. Wegapitiya added. He noted that going public stemmed from the structural change they did last year aiming at a long-term strategy. “We realised that attracting investments to the company was difficult with unrelated businesses under the same fold. So we separated leisure, power and eco by giving equal or mirrored shares to the shareholders.”
Mr. Wegapitiya explained that last the company made heavy investments in shipping which entailed buying ships in Bangladesh. “We will enjoy the real benefits of all this in the coming years.”
Meanwhile the appreciation of the US dollar, increase of LPG prices in the world market and the inability to gain the desired price revisions has dented their bottom line.
The company is badly affected by the currency depreciation that started last year. “We are a totally import dependent industry. We usually get 30 days credit. So with the currency depreciation when we bought it was one price and when we paid in 30 days it was a completely different price.
There was a major currency loss that we suffered,” Mr. Wegapitiya explained.
LAUGFS Gas will be discussing with the Consumer Affairs Authority and the other authorities to implement a formula for gas similar to the petroleum formula. “There was a formula but it was not implemented. We are requesting to reactivate this formula. Hopefully it will happen after the discussions,” Mr. Wegapitiya said.