(FESCO) is addressing a minor regulatory challenge at its liquefied petroleum gas (LPG) facility in Bernard Lodge, St Catherine. The National Environment and Planning Agency (NEPA) recently denied FESCO’s application for an environmental permit renewal, citing the lack of a lease agreement or proof of ownership of the site.
This application, submitted in November 2023, represents FESCO’s first attempt to renew the permit since acquiring the assets of Wilson Beck LPG Limited in April 2023. The Bernard Lodge facility, originally launched by Wilson Beck in May 2020, is pivotal to FESCO’s strategy to carve out a presence in the LPG market, which is predominantly controlled by Massy Gas. The Massy brands, Gas Pro and IGL, hold approximately 70% of the market share.
According to official records from the Office of Titles Jamaica, the land where FESCO’s plant is situated is owned by the Sugar Company of Jamaica, although there are registered lease agreements associated with the property. Prior to FESCO’s tenure, Wilson Beck operated under a lease agreement.
Managing Director Jeremy Barnes stated that FESCO is actively working with NEPA to resolve the documentation issue related to the Bernard Lodge facility. “We are simply renewing a previously approved permit. NEPA apparently misplaced the lease document, and we are in dialogue to submit it [Thursday],” Barnes explained to the Jamaica Observer. Sources close to the company suggest that FESCO may consider acquiring the land in the future.
Despite this temporary setback, FESCO is optimistic about its growth trajectory and continues to solidify its standing in the LPG sector. The company made headlines last April when it acquired Wilson Beck’s assets, positioning itself to enter the cooking gas market. The Bernard Lodge facility now serves as the core hub for its FesGas brand. FESCO’s initial foray into the LPG market has exceeded expectations, reporting $590 million in LPG sales in its first year, contributing over 2% to the total revenue of $28.7 billion for the 2023/24 financial year. The company’s primary revenue stream remains its wholesale and retail petroleum operations, facilitated through a network of more than 20 service stations across Jamaica.
“For every business, it takes time to build momentum, but we were pleasantly surprised by how quickly we gained traction,” Barnes noted in a previous Business Week interview. Although FESCO officially entered the LPG market in April 2023, substantial growth became apparent around October.
FESCO has been proactive in enhancing its LPG infrastructure, investing $1.4 billion during the 2022/2023 financial year to establish additional filling plants in strategic locations such as Naggo Head, Discovery Bay, and Stony Hill, alongside the Bernard Lodge facility. The company has since scaled back its capital expenditures to $270 million for the 2023/2024 financial year but remains dedicated to expanding its LPG operations.
As FESCO resolves these regulatory matters, it aims to solidify its position as a formidable player in Jamaica’s LPG market, supported by an expanding customer base and strategic investments. However, Barnes emphasized that continued growth in the LPG segment will necessitate additional capital to sustain competitiveness and meet rising demand.
