Business Times

Shell Gas Netherlands team to visit for sale discussions

A team of representatives of Shell Gas Lanka Ltd’s Netherlands parent company will be visiting Sri Lanka shortly for discussions with the government on plans to sell its equity stake in the company.
The global company has a 49% stake with the balance 51 % held by the Sri Lanka government which has announced its intention to buy the balance and fully own the gas company.

Shell Lanka spokesperson Rimore Saldin told the Business Times that discussions between the Sri Lankan government and Shell Gas Lanka’s parent company in Netherlands are already underway towards finalising the deal. The Shell decision to give up its LP Gas business in Asia is in line with the strategic policy guideline of the parent company in Netherlands, Mr Saldin said.

Other sources said while the government, which has shown keen interest, would be given first preference in purchasing the Shell stake, the company is not ruling out discussions with other interested parties including Laugfs if the price negotiations with the government fail.

Meanwhile the Bank of Ceylon (BOC), which has been entrusted by the government with the task of carrying out due diligence on Shell, has begun this process, a senior Finance Ministry official said.
He noted that the BOC officials are currently engaged in verifying the financial, legal, labour, tax, IT, environment and market and commercial situation of the company. Other areas including intellectual property, real and personal property, insurance and liability coverage, debt instrument review, employee benefits and labour matters. International transactions will also be properly checked before the share purchase, he said.

One of the primary reasons for the government’s decision to buy the Shell stake is because LPG is becoming an essential commodity in Sri Lanka and price revisions are controlled by the Consumer Affairs Authority.

The Finance Ministry official said most of the urban and semi urban households in Sri Lanka are now using gas cookers instead of using traditional firewood to cook. This situation will soon spread to the rural areas as well and if this happens, he said, ‘gas prices’ will become a highly ‘sensitive’ consumer issue which will put pressure on governments.

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