Finance News

Petromax LPG business was sold for thousands of rupees

Netherlands or Dutch company Petromax Energy has brought a big investment in the country’s liquefied petroleum gas or LPG market. The 125-year-old Dutch company is entering the LPG market in Bangladesh by buying the local company Petromax LPG. On August 22, the Petromax Authority handed over ownership to Petromax Energy. The ownership of the LPG business has been exchanged between the two companies for about 100 million dollars or about 1000 crores of rupees. This information is known by talking to several parties concerned.

According to related sources, in 1896, eight Dutch coal traders started the SHV business in the energy sector. This is the company’s first investment in Bangladesh. Through this, the company has been associated with the energy sector business of this country. Although the first in Bangladesh, the Dutch company is at the top level in the LPG market in the US, Europe and many countries in Asia. According to the company’s 2021 annual report, its annual sales were 2 billion euros. If we calculate the exchange rate of 95 taka per euro, the amount in Bangladeshi currency is about 1 lakh 90 thousand crore taka. The company has operations in 73 countries around the world.

Petromax started LPG business in the country in 2018. The company has two factories at Rupganj in Mongla and Narayanganj. Apart from this, there is another factory in Mirzapur of Tangail for manufacturing LPG cylinders. The annual production capacity of the company is one and a half lakh metric tons. In the last year 2021, the company did a business of around Tk 650 crore.

According to Bangladesh Petroleum Corporation (BPC) and LPG Operators Association of Bangladesh (LOAB) data, 56 companies in the country have taken registration from the government for LPG business. Out of these 28 companies are active. The amount of investment in this sector is about 3500 million US dollars or about 33 thousand crores of rupees (the price per dollar is assumed to be 95 rupees). Sector stakeholders say that last year 12 lakh tonnes of LPG was supplied to the market. Of this, more than 98 percent is provided by the private sector. And one and a half percent of the demand has been met by government companies.

According to a report by the state-owned LP Gas Company, the consumption of LPG in the country has increased by an average of 35 percent every year for 10 years. If this trend continues, the annual demand of LPG in the country will increase to 7 million tons by 2041. Therefore, the government has also planned to import LPG to meet the increased demand. However, Loab, an organization of private companies in this sector, says that the demand is a little higher in the government projection. The demand may increase at the rate of 20 percent in the next few years. In 2025, the demand may be 3 million tons.
As the LPG market is growing in Bangladesh, the Dutch company Petromax Energy, the leader in the world market in this sector, has come to invest in the country. However, even though the market is big, competition has also increased in this sector. Petromax has pulled itself out of this business fearing that the rate at which the company is growing could lead to an imbalance between demand and supply.

The company’s managing director Faridul Alam told Prothom Alo yesterday, ‘We have been away from this business for quite some time
Was planning to wrap up. I was looking for a potential buyer for this. And this time a good offer from SHV
get After three months of negotiations, I sold the ownership of the company to them. We are pleased to transfer our business to this global company. Hopefully, they will do something good in the country’s LPG market.

According to Petromax sources, even if the ownership is sold, there will be no change in anything from the company’s staff to the office. Everything will remain the same, only the ownership will change. For so long Petromax LPG was owned by the local company Youth Group. Apart from textile sector business, the group also owns power generation company Shahjibazar Power.

The multinational Hong Kong Shanghai Banking Corporation or HSBC Bangladesh was involved in the foreign transaction to buy Petromax from the Dutch company Petromax Energy. In a press release, HSBC Bangladesh Chief Executive Officer or CEO Mahbub ur Rahman said, ‘We are very excited to complete the acquisition agreement. This is proved by the acquisition of a Bangladeshi company by a big global organization like SHV – the economic position of Bangladesh is getting stronger at the global level.’

Meanwhile, in a notice published on the website of Petromax Energy, the company’s CEO Bram Graver said, ‘We are very excited to enter the Bangladesh market. Bangladesh will be one of our markets in the future.

According to the information of BPC and Loab, Bashundhara started the first LPG business in the country in 2000. The company is still at the top of the market. In second place is Omera. Apart from this, brands like Orion, Yamuna, Navana are among the top suppliers. The supply of fresh LPG has also started increasing for two years. In 2010, the consumption of LPG began to increase after the new gas-connections were stopped in households.