When The CEO Magazine last spoke with the CEO of South Pacific Incorporated (SPI) Iñigo Golingay in mid-2017, the LPG supplier’s market share in the Philippines stood at just 8%. Almost two years on, thanks to two new LPG import terminals and an ambitious expansion plan into the country’s surrounding islands, this share has grown to about 15%.
“We have already established a strong presence on the main island, Luzon, so our future growth will rely on our success in the small islands throughout the archipelago – of which there are more than 7,000. It’s a challenge, but we’re up for it,” Iñigo declares.
“While these islands are less competitive, it’s also more expensive to bring products there compared to the main island. They require a smaller volume but are higher in terms of margin, so we’re focused on building relationships with new customers in each market.”
According to Iñigo, an expansion of this scale wouldn’t have been possible without the support of SPI’s two shareholders: the TY Family of Isabela, and one of the country’s fastest growing oil companies, Phoenix Petroleum Philippines.
“These two entities have been in the LPG business for decades, and they are very aggressive in growing their retail businesses,” he explains.
A proudly 100% Filipino-owned company, SPI boasts the largest LPG storage capacity in the country, capable of holding 22,000 tonnes and able to receive both refrigerated and pressurised vessels. In every action taken and decision made, SPI works for a triple bottom-line that benefits the business, the community and the country.
Located in Calaca, Batangas, SPI sits just outside the National Capital Region and is easily accessible for customers in the Calabarzon region, which is comprised of Cavite, Laguna, Batangas, Rizal, Quezon and Lucena.
Currently engaged as an import terminal, the business aims to be a leader in the industry, offering convenient, integrated products and services 24 hours a day via sea and gantry loading.
According to the World LPG Association, the production of LPG is growing by around 6% per year, providing the opportunity to grow clean energy markets, reduce air pollution and save lives. The largest consumers of autogas include Asia–Pacific, South Korea, Turkey and Russia, with demand also rising in developing economies such as India and China.
Starting from scratch
An engineer by profession, Iñigo began his career at Caltex Philippines before going on to work for Liquigaz in its Philippines LPG wholesale division. It was here that Iñigo developed his talent for turnarounds; securing a host of new customers and bumping up Liquigaz’s market share from 7% in 2003 to 31% when he left in 2015.
During his tenure, Iñigo formed partnerships with Chinese distributors and pioneered the use of LPG, or autogas, in the Philippines to replace heavy use of gasoline and diesel.
These impressive results did not go unnoticed. In 2015, Iñigo was approached by Phoenix Petroleum and Republic Gas Corporation to launch their joint venture SPI, from scratch.
“We started small, but our growth has been rapid,” he explains. “Our greatest challenge is in logistics because compared to other players who have third-party haulers to deliver their products, we run a company-owned fleet.
“We started small, but our growth has been rapid.”
“Managing this fleet is always a challenge, but by doing it ourselves we’re able to cut costs, protect the interests of our customers and provide a much better service. Spending time with customers to ensure we fully meet their needs is an aspect of my job that gives me a great sense of satisfaction.”
Strength in numbers
Iñigo believes that the success of the business relies on teamwork. “We place great emphasis on hiring the right people for the right jobs, and we develop career training programs for young people so they can be promoted later down the line,” he notes. “We’re at our best when we work as a team towards a shared goal.
There is no internal competition and we don’t recognise hotshots looking to make something of themselves – everything is done together.”
With a background in marketing, Iñigo describes himself as a very results-oriented worker. “Productivity and time management are of great importance in the business, so we have incentive schemes in place to drive results.
Every employee is willing to go the extra mile to see that we achieve the company goals set by our shareholders, and we reward them generously for their hard work.”
At the centre of SPI’s operating model is its customer focus. “As a wholesale business, it’s all about building relationships, so we’ve formed a strong marketing team to work closely with customers to address their individual requirements,” Iñigo declares.
“As a wholesale business, it’s all about building relationships.”
“One customer might value a cheaper price, one might value on-time delivery, and another might value quality above all, so it’s the job of the marketing team to see that these needs are met, and it’s the rest of the company’s job to support them in that mission.”
With limited natural gas infrastructure in most areas of the country, the use of LPG as a ‘bridging’ fuel presents a strong opportunity in the coming decade. Geared towards expanding in the Visayas and Mindanao region, in late 2018 SPI launched its second terminal in Cebu with two 1,000-tonne storage facilities.
“The large scale of this terminal means that we’re able to receive larger cargo, so our gas cost is much more affordable,” explains Iñigo. “However, if we become too aggressive in the market, prices will start dropping – so it’s about finding that balance between input and output.”