India’s Confidence Petroleum and Norway’s BW LPG have joined forces to strengthen LPG terminal infrastructure and downstream operations across India. Based in Mumbai, the new JV christened ‘BW Confidence Enterprise’ will collaborate with BW LPG’s trading division as well as India subsidiary, BW Product Services and BW LPG India respectively, to source and deliver LPG from the international market to meet Confidence’s and India’s growing LPG import needs.
BW LPG has also invested $30 million (Rs 250 crore) in Confidence through a preferential allotment of equity shares. These shares will constitute 8.50% of the issued and paid-up share capital of Confidence on a fully diluted basis.
The JV has already initiated their very first project at JNPT, Mumbai with Ganesh Benzoplast (GBL) to develop one of India’s largest cryogenic LPG storage facilities and envisages future growth to support the supply of LPG into India. The company will have capacity to store 62,000 MT, which will offload the latest fourth-generation Very Large Gas Carriers (VLGC) (93,000 cbm) in a single discharge operation. The partners estimate that the operational cost for a VLGC to be around $50,000 (Rs 41.65 lakh) per day, which because of delays can run upto 10-12 days, thus adding to significant overhead costs.
With the development of the storage infrastructure, the fuel-carrying containers will be able to offload and store the fuel quickly. Interestingly, the JV plans to replicate the downstream operations with storage plants planned at Porbandar, Mangalore, Karaikal, Vishakhapatnam and Haldia in the coming future.
What’s interesting to note is that in addition to the domestic and Auto LPG demand, the partners are also optimistic on the potential of LPG as a fuel for industrial application.
They estimate that at present, globally, LPG in industrial applications (steel, smelting, etc) has reached upto 50 percent levels in Europe and China. On the other hand, it is just 2 percent in India, thus having a huge upside potential.
Targetting Rs 10,000 crore revenue
It was just last week, Financial Express Online¸ had reported the news about the company’s ambitious target to attain Rs 10,000 crore revenue in the next 3 years. Nitin Khara, Chairman & MD, Confidence Group further reiterated the new JV will help accelerate the plans.
Interestingly, the BW Confidence Enterprise plans to invest Rs 650 crore towards setting up of the storage infrastructure at JNPT. This will be in addition to around Rs 350 crore investment planned by the Confidence Group towards the type 4 cylinder business revealed last week.
The new investment will support Confidence as it expands its capacity in LPG downstream assets Confidence envisions substantial future growth by expanding its current 68+ LPG bottling plant infrastructure to 100 and adding 500 Auto LPG Dispensing Stations along with 200 CNG Stations within a span of three years. The strategic investment and infrastructure development is expected to create over 5,000 small & medium scale entrepreneurs by way of retail expansion & direct and indirect employment opportunities for more than 50,000 people.
BW LPG is the world’s largest owner and operator of Very Large Gas Carriers (VLGC) with a fleet of 46 VLGCs and 2 Medium Gas Carriers with a total capacity exceeding 3 million CBM. BW LPG India, a subsidiary of BW LPG and established in 2017, is India’s largest owner and operator of India-flagged VLGCs. It handles approximately 20% of India’s LPG imports and commands about 30% of the time-charter market in the country.
Iver Baatvik, VP & Head of Corporate Development BW LPG added, “Confidence Petroleum boasts a formidable presence in the domestic LPG industry, while BW LPG possesses deep experience in global LPG shipping and trading. The synergy between Confidence Petroleum’s local strength and BW LPG’s international reach is a catalyst to accelerate growth trajectories for both parties. We have invested over Rs 3000 crore in India, and we are planning to deepen our presence even further in an important and growing economy.”
