KARACHI: The Board of Directors of Cnergyico Pk Limited (formerly Byco Petroleum Pakistan Limited) has approved the acquisition of 57.37 percent stake in Puma Energy Pakistan Private Limited (Puma). According to material information sent to Pakistan Stock Exchange, the Board took this decision in its meeting held on Thursday.
Puma Energy has more than 542 retail pumps across the country with storage terminals in Punjab (Machike) and Sindh (Daulatpur) with total storage capacity of 10,500 MT for petroleum products. Cnergyico having one of the largest refining capacities in the country, after this acquisition would have the second largest retail fuel network, based on current number shared by OMCs in Pakistan.
The management is optimistic that with this acquisition and expansion, the company’s business diversity would further improve. Farhan Mahmood at Sherman Securities said that Cnergyico is in its final talks to acquire majority stake of 57 percent in Puma Energy (previously Admore). Though Cnergyico has not yet announced the outcome of the negotiation, there are reports that Cnergyico is about to close deal at around Rs4.0 billion for 57 percent stake in Puma Energy.
Puma Energy has total outlets of around 542 out of which 80 percent are located in northern areas. On the other hand Cnergyico has total outlets of 432. Thus after acquisition, the company will be the largest OMC in private sector beating Gas and Oil. After acquisition, company’s combined market share in retail fuel business will increase to 5.0 percent.
Currently Puma Energy, despite being the seventh largest OMC by retail outlets, has lower market share of around 1.5 percent in retail fuels, Farhan Mahmood said. This is due to the liquidity constraints faced by the company over the last few years.
Puma Energy has storage capacity of around 10,500 tons (Machike and Daulatpur) of oil products which is relatively a smaller number but enough to store oil products for 14-15 days (lower than 20 days as prescribed by OGRA). “We believe that the new group will focus on storage so as to increase market share in retail business,” Farhan said.
Cnergyico is operating in both refining and OMC business. As per September 2021 un-consolidated accounts, OMC business has largest share of 68 percent in total revenue of Rs34 billion while the rest is contributed by refining business. OMC business has contributed major share in operating profits, however, the bottom-line remained at break even as per our estimates.
“Going forward, OMC business is likely to improve after recent hike in OMC margin by 23 percent,” Farhan said.
Copyright Business Recorder, 2022