By Azlee Nor Mahmud
KUALA LUMPUR, Oct 31 (Bernama) -- NGC Energy Sdn Bhd, one of the country’s main liquefied petroleum gas (LPG) industry players, is eyeing to increase its market share in peninsular Malaysia to 25 per cent by year-end, from 22 per cent currently.
Chief executive officer Julianna Kamaruddin said the company, which acquired the LPG distribution business of Shell (M) Trading, has been able to maintain its position as the country’s number two LPG player behind Petronas in terms of market share.
"Our market share (in peninsular Malaysia) is 22 per cent, and when combined with Sabah and Sarawak, it is 18 per cent," she told Bernama here today.
However, she said despite the increased market share, the total volume for the domestic sector has declined.
"There has been a reduction in subsidy claims with the Finance Ministry or through the Royal Malaysia Customs Department from 2017 to 2019," she said.
Julianna said to achieve the 25 per cent market share, the company plans to enhance its cooperation with distributors.
"In the LPG industry, oil companies are not allowed to sell retail direct to the market, it must be through distributors, that is one of the conditions in the Petroleum Development Act, and the way to maintain volume and grow our market is through these distributors whether it’s organic or inorganic growth," she said.
She said the incentive for distributors would depend on market conditions.
“We should go through the distributor network, we acknowledge they are facing increasing costs, but then all businesses have to face cost challenges.
"We do not deny that sometimes we are forced to give a higher incentive to enhance competitiveness, and there are also cases where we review the distributor’s operating model, so that we can make it more cost-effective for them,” she said.
Julianna said with prices controlled by the government, the company’s current focus is on balancing its portfolio between market share and profitability.
She said although the government gives a price subsidy to Malaysians, it has not implemented a targeted subsidy mechanism, which means anyone can buy a cylinder of domestic LPG at a subsidised price of RM26.60, but for industrial and commercial uses, the LPG price is floated according to international market prices.
She noted that due to the price differential, subsidised domestic LPG is used by restaurants and night market operators although they should be using the 50kg LPG cylinders.
She added that the government is concerned about the large subsidy leakage and the Ministry of Domestic Trade and Consumer Affairs holds constant dialogues with LPG industry players to address the issue.