Nov 12, 2010 (LBO) - Sri Lankan liquid petroleum gas supplier Laugfs Gas, whose share issue to raise 2.5 billion rupees was oversubscribed, plans to acquire a vessel and build an unloading terminal in a new port, an official said.
Laugfs managing director Thilak de Silva said the firm wants to be able to import and store bigger quantities to cater to increasing demand with the end of the island's 30-year ethnic war last year.
An LPG carrier owned by the firm, called 'LAUGFS Wega' was sold and it plans to buy another vessel.
"We plan to buy a vessel of larger capacity - may be around 3,000 metric tonnes," de Silva told LBO at the launch of the IPO. "We looked at a few ships."
The company now imports LPG in weekly shipments from the Middle East and Singapore in parcels of 2,500MT each.
It plans to use part of the funds raised from the IPO to expand storage and increase the size of shipments.
De Silva also said Laufgs Gas wants to put up an unloading terminal in a new port in southern Hambantota that is to be opened soon.
Agil Hewageegana, chief engineer of the SLPA in charge of the 'Magampura' port project, said Laufgs Gas was one of the two firms that bid to set up LPG terminals when they issued a request for proposals, the other being a Pakistani firm.
The Laugfs Gas IPO prospectus said the firm plans to have an all-weather storage and discharge terminal in the new port of Hambantota.
This will ensure continuous supply and discharge of gas irrespective of weather and reduce costs as delays caused by bad weather can raise freight expenses.
The prospectus said it will use 425 million rupees of the funds to expand storage and filling capacities on land.
It also plans to acquire a "floating storage facility" to satisfy the increasing demand as improvements to fixed storage capacity on land take considerable time, the prospectus said.
LPG storage capacity will be increased to cater to larger import shipments enabling the firm to negotiate better terms with international suppliers, it said.
Ongoing projects will increase present capacity to 3,000MT by the end of the year.
The Laugfs Gas initial public offer on November 04, 2010 was oversubscribed and closed on the opening day itself.
The 22 percent stake is to be listed on the second board of the Colombo Stock Exchange.
source - www.lbo.lk
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