FOR local last-mile fuel distributor PS Energy, the next five years will be a critical period for the company’s scale-up plans.
The group has been actively expanding its business units, solidifying its digitalisation efforts and developing sustainability capabilities, all the while supplying fuel and related products to more than one thousand customers from various sectors, including manufacturing, food and beverage, technology and even the Formula 1 Singapore Grand Prix in recent years.
PS Energy bagged second place in the Enterprise 50 Awards and Sean Chua, its managing director, said: “The next five years will be critical as we expand into the Philippine market – we want to demonstrate that capabilities in our distribution footprint should not be restricted to Singapore.”
The company’s operations span three segments – inland, coasts and offshore islands, as well as marine waters – with a fully digitalised and streamlined workflow resting on a cloud-based integrated platform.
In an industry traditionally reliant on paper-based systems, the distributor also offers its clients digital fuel management solutions, allowing them to make more cost-effective decisions with efficiency.
Overseas expansion is key
Seeking growth opportunities, PS Energy in 2020 started assessing overseas markets under Enterprise Singapore’s Scale-up SG programme.
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It found the Philippines a promising option as a fuel net import country, which offers many business opportunities for last-mile fuel distributions, starting from in-land operations.
The group then launched its international business unit and started small-scale operations there in 2021.
“We have decided to stay focused on what we are good at,” said Chua. He noted that the small operations with about 20 staff and 12 trucks in Bataan catering to customers in Luzon have allowed the company to test waters and gain traction for a possible merger and acquisition next year.
“We need to find the right local partner with correct fuel sources to onboard the digital framework together,” Chua said, adding that the group is in talks with a few potential partners at the moment.
With the aim of expanding its team in the Philippines four to five times within the next two years, PS Energy is also seeking to leverage its digitalisation and best practices to scale the business efficiently.
The company projected that by 2025, revenue generated from the Philippine market would comprise more than half its total revenue, barring unforeseen market conditions.
Chua is hopeful that the development of the company’s business in the Philippines would serve as an example of how scalable and applicable its digitalised processes can be in an overseas market.
“We need to have the building blocks to champion the last-mile distribution part of the oil and gas value chain so that the upstream majors will find us a preferred partner to work with,” he said.
Chua highlighted that business expansion is also part of the group’s efforts to enhance its competitiveness and secure stable fuel sources, which would be essential for fuel distributions across the region.
Innovation leading the way
Something that makes PS Energy proud is its digitalised business platform that covers all three main business segments and streamlines the entire process from sales and pricing to customer service. The platform, in turn, also mitigates risks across operations, such as liquidity and pricing risks.
“The main bulk of digitalisation is process redesign,” said Chua, noting that the group had been working on it before the Covid-19 pandemic struck.
In particular, with digitised pricing and inventory management, the group managed to cope with oil price volatility amid macroeconomic uncertainties over the years.
“Even in the low fuel price season during Covid-19 and the price hikes last year, we were able to manage the pricing risks and stay profitable.”
For FY2022, the group registered S$10.8 million in net profit, more than double from FY2021. Net cash flow generated from operating activities stood at S$28.4 million, compared to S$16.3 million cash used in the year before, which Chua attributed to years of process redesign efforts paying off.
The company also seeks to meet market demand for innovation with a customised self-service dispensing infrastructure that offers remote fuel-level monitoring and is integrated to the centralised digital platform.
Sustainability is the future
“We want to get the first-mover advantage when it comes to sustainability and demonstrate to the market that we have the capability to distribute green fuels,” said Chua, adding that PS Energy is on track to build a green fuel blending facility at the Penjuru site.
The facility is expected to commence production by the second quarter of 2025 and be capable of producing and blending both biofuels and renewable fuels, offering customised fuel blends to cater to different customer demands.
The addition of the blending facility is expected to enhance PS Energy’s green fuel production by almost 15 times.
The company is aiming to further strengthen its biofuel production from 2028, in line with the Singapore Green Plan 2030. This requires all new harbourcraft operating in Singapore’s port waters to be fully electric, capable of using B100 biofuels, or compatible with net-zero fuels by 2030.
Chua also said that many commercial trucks today are still using fossil fuels for their high horsepower engines, noting that it takes time for the market to fully adapt to the green fuels.
“While Singapore is looking for alternative energy sources, we see ourselves fitting in nicely by bridging the gap between bio and renewable fuels,” he said.
“We are all in to assist our customers in cutting down carbon emissions without much of the Capex (capital expense) in the transitioning phase.”
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