Sri Lanka Laugfs Gas ramps up regional trading operations
ECONOMYNEXT – Sri Lanka’s Laugfs Gas group, which supplies liquid petroleum gas, is ramping up trading operations with a professional hired in Dubai and increasing voyages of its small fleet of tankers.
The company said it will be able to exploit lucrative trading opportunities in the south Asia region once its ‘flagship’ project, the storage terminal in Hambantota port on the south coast, comes in to operation in the second quarter of 2018.
“The connecting pin falls into place in 2018 connecting our current operations to position Laugfs Gas as a regional player in LPG,” the company told shareholders in its 2018 annual report.
Group managing director Thilak De Silva said the firm made investments of Rs6.1 billion in the past year in which it made a loss.
The investments were for expanding distribution capability in Sri Lanka and Bangladesh and the construction of the Hambantota storage terminal, one of the largest in South Asia, with 30,000 MT of storage capacity.
“Consequently, our revenue generation capacity has increased although its impact has been moderated by the current pricing model in our principal market, Sri Lanka,” De Silva said.
The storage terminal “is a pivotal sector and will be the focus of growth for realising our future aspirations.”
De Silva told shareholders the Laugfs Gas trading arm in Dubai delivered 234% increase in revenue last year, strengthening midstream operations.
The group’s transport and logistics business also delivered 10% growth as it chartered a vessel to an external party expanding operations.
“We plan to exploit the trading opportunities in global markets as LPG is a widely traded product . . . indicating lucrative trading opportunities.”
The Dubai-based trading arm and sourcing hub of the group, Slogal Energy DMCC, plans to start activity as a trading hub
Laugfs Gas has appointed an experienced trader to cater to the South Asian region to support its strategic plan of commencing activities as a trading hub given the island’s strategic location to supply LPG to South Asian countries.
Revenue from the trading segment rose to Rs 6.6 billion last year from Rs1.97 billion the previous year.
Laugfs Gas said it will continue to add more vessels to its small fleet of three tankers with the commencement of terminal operations at Hambantota.
The number of voyages during the year increased to 32 from 23 last year with increasing procurement activity by both Sri Lanka and Bangladesh based downstream companies of the group.
However, the trading segment reported operating losses of Rs 98 million during the year as a result of starting trading operations from the second half of the financial year by taking on board a professional LPG trader.
(COLOMBO, June 18, 2018)