Lao State Fuel Company earns over 20 b kip
Lao State Fuel Company earns over 20 b kip
Lao State Fuel Company has made a profit of more than 20 billion kip every year, according to a senior deputy managing director of the company.
Lao State Fuel is the leading oil company in Laos and has been making good profits for many years. It covers a large proportion of the market it shares with other companies in the country.
Mr Khamchanh Rattanavong said that the company has made profit every year, except for 1997-98 when the economy nosedived during the Asian financial crisis.
At that time the government did not allow the company to put up its prices. If the firm had adjusted prices in line with market mechanisms, the company would have made a profit. But if they raised prices, it would have been harmful for every sector of industry and society. So the government decided that overall it was better to sell the fuel at a loss.
The company is interested in listing on the stock market, but it needs a comprehensive feasibility study and information from other Asean countries.
Mr Khamchanh, who is also President of the Lao Petroleum and Gas Association, said that officials of the company were in discussion about this issue. Officials of the Ministries of Industry and Commerce and Finance and the Lao stock market also came to meet with the company about the potential listing.
In Vietnam the state fuel company does not sell its shares to the public but it does sell them to its staff, whereas the PTT oil company in Thailand sells shares to both its staff and the public through the stock market because it is already well supplied with technical infrastructure. The most important thing, therefore, is for the company here to act in a way that reflects the real situation in the country, according to Mr Khamchanh.
The obligation of the company is to carry out its duty to the state as it cannot focus only on business without taking care of people.
The company is also cooperating with Chinese and Thai companies to establish two oil refineries. The first one is located at km 21 in the Xaysettha economic zone in Vientiane with a production capacity of 800,000 tonnes per year. Construction is expected to be complete within the next 2 years if everything goes according to plan.
The second refinery is in Dongchong village in Xaysettha district, Vientiane. Construction is already underway and it is expected to be finished in the next few years. The production capacity is 2 million litres per day. When that time comes, it may be possible to enter the stock market, he said.
However, the company needs to have more discussions with business partners. If it needs more funds to expand it may have to sell shares on the stock market but if there is enough money in reserve this is not necessary. This has to be determined by its board of directors.
