Gas-piping firm hopes to start cylinder LNG and electricity business in city-state.

 

GASHUB, which is pulling its reverse takeover plans in Australia for a listing on the Singapore Exchange (SGX), has big plans for the city-state this year. The Singapore gas piping firm plans to start selling liquefied natural gas (LNG) to industrial users in small cylinders, and will also enter the electricity retail market.

 

In what will mark a first in Singapore, GasHub will be setting up an LNG refuelling site in the west in June, using equipment bought from Chinese firm Chengdu Huaqi Houpu Holding Co (Houpu).

 

These plans are part of the group’s strategy to expand into LNG-related services, an area adjacent to its gas piping business of the past 26 years.
“Business-wise, we will not have much exponential growth just for gas piping,” said its chief executive, Aviers Lim in an interview with The Business Times. “We see LNG as a rapid and fast-growing area we should tap.”

 

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The group hopes to ride on plans by the Singapore government to grow the LNG sector, as well as expected demand growth for the fuel in Asia. Furthermore, LNG demand will probably be supported by low prices given the supply glut in the market which is expected to last till 2020, he said.

 

GasHub will collect LNG from the Jurong Island terminal using isotanks , and truck these to the refuelling site. There, it will transfer the LNG at sub-zero temperatures to cryogenic cylinders measuring 210 litres in size. It will then send these to industrial customers, who can use it in lieu of liquefied petroleum gas (LPG), town gas or diesel.

 

While a new concept for Singapore, bottled LNG is already prevalent in China, said Mr Lim. In fact, Shenzhen-listed Houpu has built some 5,000 natural gas

refuelling stations in China, making it the largest installer in the country.

 

Mr Lim said that GasHub selected Houpu as its supplier because of cost and “they have the technology, they have the expertise and they have the knowledge and certification”.

 

LNG has a few advantages over other fuels, in the firm’s view. For one thing, LNG is much less flammable than LPG. “LNG will not explode or burn. It’s safer than LPG many times,” explained Mr Lim.

 

Furthermore, compared to compressed natural gas (CNG), it carries more energy content, which means that customers can buy less.

Along with the foray into LNG, GasHub has obtained an electricity retail licence.

 

While the electricity retail market has seen a flood of new entrants ahead of full market liberalisation later this year, the other 30 retailers registered so far are either power producers or traders, Mr Lim said. “We are going in on a different angle.”

 

GasHub sells embedded power generation units that use natural gas to produce power, heating and cooling solutions. These units – which it has branded 3gex, short for tri-generation – help industrial players and building owners to increase efficiency.

 

“Currently, most buildings require back-up power. We are able to remove this with our embedded technology, and the grid becomes back-up power,” he explained.

 

Furthermore, besides electricity, many industrial players such as food factories and chemical plants require heat, he noted. “At the end of the day, you’re talking about giving customers more savings and the experience of knowing what they consume (through real-time data).”

 

The firm has received “plenty of interest” so far, due to the cost difference and the higher efficiency it offers.

Mr Lim estimated that its 3gex unit offers savings of 30-40 per cent off the SP tariff.

 

The bottled LNG business will be rolled out in the third quarter, while the retail electricity businesses will be commercially operational by the end of this year.

 

GasHub had planned to raise up to A$10 million (S$10.2 million) on the Australian Securities Exchange via a reverse takeover of Australia-listed Raffles Capital.

 

But with so much activity planned in Singapore, it eventually decided that an initial public offering on the SGX would be more suitable. It is targeting the flotation to take place in the second or third quarter next year.

 

The firm recorded a net profit after tax of S$650,000 on revenue of S$10.8 million in 2016.

 

GasHub eventually hopes to replicate the same bottled LNG business in other parts of Asia, said business development director Roger Khoo. “Until today, while the use of bottled CNG is very prevalent, the use of bottled LNG is still a relatively new concept in the industry. So this is the front that we’re pushing now.”

 

ANDREA SOH

THE BUSINESS TIMES