KUCHING: Petronas Dagangan Bhd (PDB) will divest its liquefied petroleum gas (LPG) business in Sarawak to PetrosNiaga Sdn Bhd (PNiaga) under a strategic partnership between both parties in Sarawak.

       Under the deal, PDB will then subscribe for a 49% equity stake in PNiaga, a wholly-owned subsidiary of state-owned Petroleum Sarawak Bhd (Petros), which is involved in the supply of industrial bulk, commercial and residential LPG.

       Following this, Gas Petronas will gradually transition to Petros LPG gas-filled cylinders, fullfilling the Sarawak government’s aspiration for statewide coverage of Petros LPG and realising the intent of the Sarawak Distribution of Gas Ordinance 2016, said Petros.

       PNiaga aspires to have a leading presence in the LPG business in Sarawak via the acquisition of PDB’s Sarawak LPG business.

       PDB and PNiaga entered into heads of agreement for the proposed transactions here on Sunday.

       PNiaga will make cash payment of RM40mil to PDB for the purchase of PDB’s Sarawak LPG business, and issuance of shares in PNiaga to PDB, which will result in PDB acquiring a 49% equity interest in PNiaga.

       The disposal consideration also included a contingent payment by Petros to PDB, subject to performance target agreed by the parties, according to PDB.

       All definitive agreements for the transactions – business transfer agreement, share subscription agreement, shareholders agreement and transitional services agreement –are expected to be inked by March 31, 2022.

       Through the strategic partnership, PDB and Petros will collaboratively market LPG products in the state. PDB has an integrated LPG supply chain network and 30 years of experience in the business in Sarawak.

       Petros LPG entered the domestic market on Aug 4, 2021.

       Its LPG gas-filled cylinders are currently available through PNiaga dealers in the first serve areas of Kuching (Petrajaya, Matang, BDC and Tabuan), Padawan and Bau, expanding statewide in 2022.