National Gas Company (NGC), a major supplier of liquified petroleum gas (LPG) in the sultanate, has decided to pull out of its joint venture with Kuwait-based Gulf Cryo Holding Company.
Gulf Cryo Holding will be buying out National Gas Company's entire 49 per cent stake in National Gulf Cryo for about RO500,000, ending a three-year long relationship.
When contacted by Muscat Daily, NGC chief executive officer Goutam Sen said that the company decided to exit the business because it was proving to be non remunerative.
"We entered into a joint venture three years back but exited because of the slump in industrial gases in the whole of Middle East. Our erstwhile partner will now run the business on its own," he said.
In a disclosure to the Muscat Securities Market (MSM), the company said, "National Gas has entered into a memorandum of understanding with its associate company, National Gulf Cryo to completely divest its stake in the associate company by transfer of its shares in favour of Gulf Cryo Holding, Kuwait."
"This will not have any adverse financial impact on National Gas Company," the statement added. National Gas entered into the joint venture to form 'National Gulf Cryo,' with a 49 per cent stake and the rest 51 per cent stake with Gulf Cryo Holding, Kuwait.
The joint venture was regulating the manufacturing and marketing of industrial gas business in Oman and facilitating investments in industrial gas projects. The investment also included storage, distribution, filling of industrial gas and enhance even higher standards in production facilities.
NGC reported a 62 per cent rise in net profit to RO648,000 for the six-month period ended June 30, 2011, mainly on the back of strong growth in LPG exports and higher international prices of petroleum.
However, due to the fixed quota on selling LPG to local distributors, the Omani market remained constrained for NGC in terms of volume growth as well as prices.
© Muscat Daily 2011
