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SETTING UP AN LPG SETTING UP AN LPG BUSINESSBUSINESS

IN THE PROVINCE OF PALAWAN

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GoalsGoals

To come up with a business plan that would allow penetration to the existing petroleum distribution market in the province of Palawan.

To set-up a viable supply and distribution channel that would sustain the business’distribution efforts in the province.

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DescriptionDescription

The Plan involves setting-up two (2) Business undertakings:

Cooking LPG Wholesale & Retail trade network

Set-up Auto LPG Refilling Stations

FOR MORE INFO...

Complete Profile of the PROVINCE OF PALAWAN

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The Competitive SceneThe Competitive Scene

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The ScenarioThe Scenario

• On the LPG COOKING GAS business:

PETRON practically monopolizes the market, with no Oil Majors currently is engaged in the cooking LPG distribution business, which solely operates an LPG refilling facility in its Puerto Princesa City depot. Even the local CAT Gas has been drastically taken out of the competition scenario, with TOTAL making some intrusions for its 5kg LPG tanks, available in the city’s central area only.

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The ScenarioThe Scenario

•On the AUTO LPG GAS STATION business:

With the U.S. Government initiated environmental program, the Tricycle Emission Reduction Program through LPG fuel conversion scheme, where they subsidize part of the conversion cost, which the City government disburses- at least 2,000 units of the more or less 7,000 tricycle units have already been converted; the prospects of operating an Auto LPG Gas refilling station is promising! As of now, the only conversion entity in the city is Black Prince, which carries the Indian SKN brand. LPG Refilling is done through a “Palit-Tangke” scheme through arrangements with Petron. This procedure is actually hampering the expansion of the Auto LPG Business, with no visible Auto LPG Gas Station on site. There are still about 5,000 units of tricycle to be converted, plus the more than 1,000 units of Shutle Van, about more than 500 units of Multi Cabs and more than 5,000 units of pump boats scattered in the Palawan province. Prospect of Setting of an Auto LPG Gas Station is promising, but the major issue to be considered is the Bulk LPG Supply Issue, which I believe Petron will negatively respond.

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Competitive AnalysisCompetitive Analysis The Palawan LPG Market is dominated by PETRON. Shell and

Caltex are not currently engaged in the LPG business. TOTAL as come up with its Total Gaz, but only promoting its 5 kg LPG tank class.

PETRON– Operates an all-products depot, with an LPG refilling plant

and lubricants warehouse in Puerto Princesa City– Is considered a major force in the retail and wholesale fuel

distribution industry, with at least one (1) gasoline retail station operating in almost all towns of the province

– Has an established number of dealers and distributors, specially for its LPG brand, GASUL

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Competitive AnalysisCompetitive Analysis

TOTAL– They have an LPG presence in Puerto Princesa City

only, but only for a 5 kg. LPG tank class.

– Although, its has a gasoline station in San Vicente, it

has no LPG yet.

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Competitive AnalysisCompetitive Analysis

PETRON TOTAL OWN

SUPPLY ADVANTAGE

Has Own All- Products Depot in Puerto Princesa City

With Supply Arrangement with Petron

Will set-up Refilling Plant for Cooking LPG and Auto LPG Stations in strategic area

LOGISTICAL ADVANTAGE

With Fleet of Haulers

Contracts haulers of Petron

With ready Fleet of Haulers

RETAIL MARKET PRESENCE

Has a retail station in almost every town

Has only 1 station in San Vicente town

Will still set up retail outlets & auto LPG stations through its’ Business Partners

BRAND ACCEPTANCE

Widely accepted

Accepted Via Market Niche strategy to attain province wide coverage

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The Market StrategyThe Market Strategy

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Market StrategyMarket Strategy

The Market strategy will involve the following courses of action Divide the Palawan market into FOUR (4)

MARKET TERRITORIES:– UPPER NORTH will include the municipalities

of Busuanga, Coron, Culion, Cuyo, Linapacan, Agutaya, Magsaysay

– NORTH will be El Nido, Taytay, San Vicente, Roxas, Dumararan, and Araceli

– CENTRAL will be Puerto Princesa City, Aborlan, Kalayaan, and Cagayancillo

– SOUTH will be Espanola, Narra, Quezon, Rizal, Brooke’s Point, Balabac, and Bataraza

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Market StrategyMarket Strategy

The Market strategy will involve the following course of action FOR THE COOKING LPG BUSINESS, set up Three (3) Major

Dealers for: Upper North & North Central South

- Each Dealer will set-up retail outlets in their areas!

FOR THE AUTO LPG BUSINESS: Will set up at least One (1) Auto LPG Refilling Station within PUERTO PRINCESA CITY to provide the auto LPG requirements of the almost 7,000 Tricycle Units and other motor vehicles.

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Market StrategyMarket Strategy

There will be TWO (2) Separate Business Operators for the LPG BUSINESS in Palawan.

ONE (1) FOR THE COOKING LPG BUSINESS, which will appoint and set up Three (3) Major Dealers for:

Upper North & North Central South

- Each Dealer will set-up retail outlets in their areas!

ONE (1) FOR THE AUTO LPG BUSINESS: Will set up at least One (1) Auto LPG Refilling Station within PUERTO PRINCESA CITY to provide the auto LPG requirements of the almost 7,000 Tricycle Units ( to date, only 2,000 units are already LPG converted) and other motor vehicles – pump boats, multi cabs, shuttle vans. The Business Operator will also engage in the Conversion Kit Business in order to expand its LPG consumer base.

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Market Territory PROFILE LPG Business Program for Palawan Province

UPPER NORTH TERRITORY: Busuanga, Coron, Culion, Cuyo, Linapacan, Agutaya, Magsaysay

NORTH TERRITORY: El Nido, Dumaran, Roxas, Taytay, San Vicente, Araceli

CENTRAL TERRITORY:Puerto Princesa City, Kalayaan, Aborlan, Cagayancillo

SOUTH TERRITORY:Espanola, Narra, Brookes Point, Rizal, Quezon, Bataraza, Balabac

LEGEND:

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Market StrategyMarket Strategy

The COOKING LPG BUSINESS OPERATOR will SELECT and APPOINT THREE (3) DEALERS who will each manage and operate an assigned Market Territory. Scope of responsibilities include the following:

– Handle the distribution of LPG products in their assigned territories

– Set up retail outlets within the assigned market territory

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Market StrategyMarket Strategy

The AUTO LPG BUSINESS OPERATOR will manage and operate an AUTO LPG GAS STATION within Puerto Princesa City. Scope of responsibilities include the following:– Handle the day-to-day management and

operation of the station– Promote for the conversion of the

remaining 5,000 more or less, tricycle units and other motor vehicles in the city.

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Market OverviewMarket Overview

WHOLESALE & RETAIL MARKETHouseholds & Businesses

TRICYCLES, PUMP BOATS, MUTLICABS, SHUTTLE VANS

Conversion Kits for Vehicles

COOKING LPG BUSINESS OPTR

AUTO LPG GAS STATION OPTR

LPG BULK SUPPLIER

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Project ViabilityProject Viability

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Project ViabilityProject Viability

Capital Investment for SUPPLY DEPOT Land Development & Construction Cost: Php M (including piping, lighting & electrical, and concreting & other structures)

Storage Tanks (60,000 kgs capacity x 2): Php M

(Fabrication Cost/Tank: Php 000,000 x 2 units)

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Project ViabilityProject Viability

Capital Investment for AUTOGAS STATION

Complete set-up including structures, pavement, pump and tanks,

pipings, signages, and lightings: Php M

ESTD TOTAL COST FOR TWO (2) AUTOGAS STATIONS: Php M x 2 units = PHP M

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Projected VolumeProjected Volume

ESTD TOTAL SALE VOLUME FOR COOKING LPG:

Average Daily Volume: 2,000 Liters per STATION

Average Monthly Volume: 60,000 Liters per

STATION

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Projected VolumeProjected Volume

ESTD TOTAL SALE VOLUME FOR TWO (2) LPG AUTOGAS STATIONS:

Average Daily Volume/Station: 2,000 Liters per Station

Average Monthly Volume/Station: 60,000 Liters per Station

Estimated Total Volume per Month for 2 LPG AUTOGAS STATIONS:

2 X 60,000 Liters = 120,0000 ltrs. per Month

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ResourcesResources GROUP has a capability to set up an LPG REFILLING

PLANT in Palawan. GROUP has a team of personnel that would handle the

entire business operations. GROUP can draw up a standing Supply Arrangement with

Total that may be explored to sustain the project. GROUP was already able to identify and appoint the Three

(3) Cooking LPG Dealers for Palawan, although contract finalization is still up.

Negotiation for a possible Auto LPG Station is being undertaken now. Possible Auto Gas Operator is already identified and negotiation is under way.