Future Energy Source Company Limited, which does business as Fesco, has injected the bulk of $894 million to make its way into the cooking gas market and, to a lesser extent, the construction of its Beechwood Avenue service station, from which it expects to largely recover when the cooking gas division launches in fiscal year 2024.
The company’s CEO, Jeremy Barnes, while not disclosing the current status of the oil marketing company’s development work for entry into the LPG or cooking gas business, said the company was injecting the most of its excess cash in the capital-intensive business.
Its asset balance for the year ended March 2022 was $1.1 billion, compared to $256 million for the year ended March 2021.
“This business is not just about acquiring fuel, you need to get trucks to the refinery. You also need to have storage, filling facilities, as well as storage at each customer’s home, i.e. the bottle,” Barnes told shareholders at the company’s 2022 annual general meeting on Friday.
“We have not yet sold a liter of LPG and have therefore gone through this period of investment without generating income. But, in the coming months or quarters when we launch the business, we expect to see that money flow back into the business,” he said.
FESCO’s entry into the LPG market is just one of the ways the company plans to diversify its revenue streams, which reached $6.5 billion for the three months to June 2022. increased 280% to $151 million year-over-year.
The company also earns from its convenience store, the FYC Refill Water Store and Express Mart, motor oils, as well as restaurant rental agreements.
Its diversification into the supply of cooking gas in the commercial and residential markets and the construction of its network of service stations are expected to be the main drivers of the company’s growth.
The oil marketing company recently celebrated the opening of another service station under the concessionaire owned and operated business model in Whitehall, St Elizabeth, taking its nationwide service station network to 17. Another, in Ocho Rios, St Ann, is expected to open between next month and November, followed by a service station in May Pen, Clarendon in FY2023.
“In addition to that, we have several stations in the pipeline at various stages of development, from drawings to those that are approved. Our intention is to open three to five stations in the next 12 to 24 months,” Barnes said.
“We also intend to launch additional grades of fuels and increase the availability of E10 88 and other blended fuels across the island,” he said.