Puma Energy has become the first foreign investor to be granted permission to import, distribute and sell fuel, in a move that could herald a shakeup of the retail market.
Puma’s country manager for Myanmar, Mr David Holden said that the decision would enable the company to sell petrol and diesel at Puma-branded retail outlets, as well as distribute to other commercial operators.
He said consumers would ultimately benefit from the increased competition and simpler supply chain through lower prices, improved quality and proper quantities being distributed.
“At the moment there are a lot of people in the [supply] chain. The question always is: Are you getting transparently international price movements reflected in pump pricing? The honest answer is, the more competition you have, the more chance you have of that being a reality,” he said.
“I think that there’s always a focus on price but actually the bigger focus should be on the quality and quantity.
“As in most developing markets, the quality of the fuel [in Myanmar] is not always so straightforward … We’ve invested a huge amount of money through our supply chain to be able to physically prove to customers that what they get is 100 percent of the quality they’d expect.”
The Myanmar Investment Commission signalled the opening of the midstream and downstream market to foreign investors in April, when it lifted a requirement that foreign investors partner with the government.
Under notification 15, released by the MIC on April 10, foreign investors now only require Ministry of Electricity and Energy approval to enter the market.
In May, the commission approved an application from Puma Energy Asia Sun to broaden its existing investment permit, which enables it to store fuel at its new US$92 million terminal at Thilawa, to also include importing, distributing and selling petroleum products.
Puma Energy Asia Sun is a partnership between Puma Energy, which holds 80 percent, and local firm Asia Sun.
The decision to open the market has been criticised by the Myanmar Petroleum Trade Association, which is run by the local companies that currently dominate the market.
Association secretary Dr Win Myint told Frontier that allowing foreign investment would put at risk the jobs of 67,000 people currently employed in the sector.
He acknowledged that consumers frequently complained about the quality and price of fuel available at service stations but said that more competition was not the answer.
“The lack of progress is not because of a lack of competition – it’s because of a lack of technology and knowledge. And these are issues that can be rectified,” he said.
Holden said he wasn’t surprised by the industry’s response but added that local companies could also benefit from the additional competition.
“If you’re currently the incumbent supplier into a market, why would you be happy to see someone else coming into the market?
“But I think the market is growing sufficiently that there’s room for all companies that want to operate to the correct standards and I think that in some ways the competition will actually help to improve standards and help to improve pricing in the market – I mean, it has to.”