PetDag: Decanting issue hurts LPG retailers

By MARK RAO / Pic By AFIF ABD HALIM

THE decanting of liquefied petroleum gas (LPG) is the biggest threat to the LPG business in the country, as some third parties are illegally profiting from the differences between the subsidised rates and market prices.

Petronas Dagangan Bhd (PetDag), the marketing arm of Petroliam Nasional Bhd (Petronas), which controls 50% of Malaysia’s LPG market, is currently working with the relevant authorities to tackle the issue while protecting its market share.

PetDag GM for the LPG business division Ramzul Hakim Ramli (picture) said “decanting” involves the transfer of a product from a cheaper source to a higher-priced product, a process that is being used illicitly by some LPG dealers for extra profit.

“The process is done illegally and is also dangerous in terms of safety. It is happening because of the differences between world prices and subsidised prices,” he said at a media briefing in Kuala Lumpur yesterday.

In Malaysia, LPG is available in 12kg, 14kg and 50kg cylinders in the market, with the latter sold at market- driven prices and not at subsidised rates.

The 12kg and 14kg cylinders are mainly sold for domestic and household uses, while the 50kg cylinders, or bulk storage tanks, are supplied for the commercial and industrial uses.

PetDag currently controls 50% of the domestic LPG market with the widest supply and dist ribution network in the country.

This comprises two refineries and eight terminals, and the supply is divided equally between Peninsular and East Malaysia.

Ramzul Hakim said decanting occurs in any LPG market that has differences in prices.

PetDag, the retailer of Gas Petronas, is working with the authorities to eradicate the issue.

“Our stand is that we do not encourage decanting and do not allow our dealers to be involved.

“Those caught will receive the heaviest of punishments, including termination,” he said.

He said PetDag is cooperating fully with the Domestic Trade, Cooperatives and Consumerism Ministry regarding the illegal decanting activity, and is further communicating with Petronas on the matter.

The downstream oil and gas product retailer is also positive on Malaysia’s LPG outlook despite the saturated industry. PetDag has also set the target to increase its share in the market, in line with domestic growth.

“We will always strive to increase our market share, and our strategy is to grow naturally with the market, which increased by 1.5% in 2016. LPG market growth is dependant on population growth and we see this happening in Malaysia,” Ramzul Hakim said.

He said PetDag is also ramping up its digital marketing strategy via the Gas2u android and iOS mobile application — the first gasbased mobile app in Malaysia which allows users to order LPG gas via smartphones.

Meanwhile, the gas market in Malaysia is also expected to see greater third-party access to the country’s natural gas infrastructure, following the Gas Supply (Amendment) Act 2016, which was passed on June 14 last year and scheduled to come into effect on Jan 16, 2018.

The new ruling will allow third-party operators to import, regasify, transport, distribute, ship, retail and use natural gas in Malaysia.