Petros to have LPG monopoly in Sarawak

KUCHING: Petroleum Sarawak Bhd (Petros) will have the monopoly to distribute liquefied petroleum gas (LPG) statewide in Sarawak from next month.

Its wholly-owned subsidiary, Petros Niaga Sdn Bhd will be the sole LPG distributor for households, commercial and industrial sectors from Dec 1 as the distribution licence of another company – Mygaz Sdn Bhd – will not be renewed when it expires at the end of this month.

Sarawak Utilities and Telecommunications Minister Datuk Seri Julaihi Narawi said as the state government had decided not to renew the LPG distribution licence of another company, which he did not name, when it expires this month,

Petros Niaga will control 100% of the LPG market in Sarawak from next month.

According to him, Petros Niaga currently controls about 68% of the LPG market in Sarawak while “another company” has a 32% market share.

Last week, the Sarawak state assembly approved the Distribution of Gas (Amendment) Bill 2023 that empowers the state government to appoint state-owned Petros as a gas aggregator.

To recap, Mygaz (the Malaysian subsidiary of Thailand’s Siamgas and Petrochemical Co Ltd) operates the LPG business in Malaysia following the acquisition of the Shell LPG brand from Shell Timur Sdn Bhd in 2013.

Since then, Mygaz has been managing the bottling and distribution of LPG in Sarawak for household cooking gas and supply to commercial and industrial sectors.

In an immediate response to the Sarawak government’s decision not to renew the company’s LPG distribution licence, Mygaz East Malaysia general manager Pakamard Boonsawat said it came as a shock as thousands of Sarawakians may lose their jobs.

She said Mygaz’s contractors, suppliers, transporters and dealers wanted the company to seek a solution to the matter.

According to Pakamard, Mygaz has been operating in Sarawak and Sabah and parts of Peninsular Malaysia for more than 10 years.

The company has a strong client base and regular contractors.

The Petros LPG brand was launched in December 2020 and sold for RM26.6 per 14kg cylinder in Sarawak.

Petros Niaga has continued to supply essential gas to over 25,000 households and more than 1,000 commercial businesses in Miri through its piped natural gas grid, operated by its wholly-owned unit Sarawak Gas Distribution Sdn Bhd.

Petronas Dagangan Bhd (PetDag) has also sold its LPG business in Sarawak to Petros.

In March 2022, PetDag inked a business transfer and share subscription agreement with Petros and Petro Niaga to sell its LPG business in Sarawak to the latter.

Under the agreement, PetDag would subscribe to a 49% stake in Petros Niaga as part of the business transfer and share subscription agreement.

The deal involved a cash payment of RM40mil from Petro Niaga to PetDag, allotment and issuance of 49% stake in Petro Niaga to PetDag as well as a contingent payment of up to RM40mil by Petros to PetDag.

Under the deal, PetDag will market the Petros-brand LPG cylinder to households and commercial customers in Sarawak.

According to PetDag, the deal will result in a long-term strategic partnership with Petros in developing the LPG business in Sarawak.

Julaihi said Sarawak aims to utilise at least 30% of the natural gas produced within Sarawak for domestic use.

As a gas aggregator, he said Petros’ principal functions are to manage the procurement of natural gas from all sources for distribution and supply to any person, plant, facility and premises in Sarawak to develop, expand, manage and maintain gas distribution network and systems.This includes, but not limited to, pipelines, terminals for receiving gas, processing plants and storage facilities.

“My ministry will ensure that all persons undertaking activities listed under section seven of the Distribution of Gas Ordinance 2016 must obtain licences from the director of gas distribution.

“All persons issued with licences under section seven of the Ordinance for the distribution, supply and sale of gas in Sarawak shall sell and deliver their gas to Petros to enable it to procure sufficient gas for distribution and supply to consumers.

“This includes liquefied natural gas plants at reasonable prices,” he added.

Julaihi said the Distribution of Gas (Amendment) Bill 2023 introduced provisions to enhance enforcement, including remanding those arrested under the ordinance and seizure of property.