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FILOIL EXPANSION PROGRAM FOR THE PROVINCE OF PALAWAN

FILOIL

2006

Prepared By: Jeremy Harry Amar

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Goals

To come up with a business plan that

would allow FILOIL to penetrate the

existing petroleum distribution market in

the province of Palawan.

To set-up a viable supply and distribution

channel that would sustain FILOIL’s

petroleum distribution efforts in the

province.

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Description

The Plan involves setting-up FOUR (4)

Supply Depots (with 300 kl storage

capacity) and at least TWENTY EIGHT

(28) PORTAGAS Stations strategically

dispersed within the province to ensure

FILOIL’ competitiveness in the market.

FOR MORE INFO...

Complete Profile of the PROVINCE OF PALAWAN

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WHAT IS A PORTAGAS STATION?

The FILOIL PORTAGAS Station is a fully

transportable, single or multi-component

PORTABLE GASOLINE STATION designed for

easy installation. It is made of 100% fabricated

steel materials welded and bolted together,

complete with a cashier’s office, a service

platform with digital fuel dispensing pump

equipment. The PORTAGAS Station comes in

three (3) designs that can be adopted with the

area. Its steel canopy is conveniently foldable and

detachable for transporting purposes. The

PORTAGAS over-all design features its significant

economy, not only in its construction/ installation

phase, but more so in its operational stage.

However, the materials and dimensions of the

PORTAGAS Station fully complies with the

Department of Energy specifications and

standards.

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The Competitive Scene

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Competitive Analysis

The Palawan Petroleum Market is dominated by the Oil Majors: PETRON, SHELL, and CALTEX. There are no Independent or Small Players in the province competing with the Oil Majors. Although, there are small “Takal Operators” that buy their fuel products from the Oil Majors in their small time retail operations

PETRON – Operates an all-products depot, with an LPG refilling plant

and lubricants warehouse in Puerto Princesa City

– Is considered a major force in the retail and wholesale fuel distribution industry, with at least one (1) gasoline retail station operating in almost all towns of the province

– Has an established number of dealers and distributors

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Competitive Analysis

SHELL – Have product borrowing arrangement with

PETRON Depot in Puerto Princesa City for its fuel withdrawals.

– Is also considered a major force in the retail and wholesale fuel distribution industry in Palawan, with at least one (1) gasoline retail station operating in almost all towns of the province

– Has an established number of dealers and distributors also.

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Competitive Analysis

CALTEX – Also has product borrowing arrangement

with PETRON Depot in Puerto Princesa City for its fuel withdrawals.

– Through its appointed Distributor, Mr. William Tan, is also a major force to contend with in the retail and wholesale fuel distribution industry in Palawan.

– Has an established number of dealers and distributors in the province.

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Competitive Analysis

PETRON SHELL CALTEX FILOIL

SUPPLY

ADVANTAGE

Has Own All-

Products Depot in

Puerto Princesa

City

With Supply

Arrangement with

Petron

With Supply

Arrangement

with Petron

With OWN Supply

Depots ( 300 KL

capacity ) to be set-

up in four strategic

areas

LOGISTICAL

ADVANTAGE

With Fleet of

Haulers

With Fleet of

Haulers

With Fleet of

Haulers

With ready Fleet of

Haulers

RETAIL

MARKET

PRESENCE

Has a retail station

in almost every

town

Has retail station

in almost every

town

Has retail

station in

almost every

town

Will still set up retail

stations through

Business Partners

BRAND

ACCEPTANCE

Nationwide

Coverage

Nationwide

Coverage

Nationwide

Coverage

Via Market Niche

strategy to attain

province wide

coverage

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The Market Strategy

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Market Strategy

The Market strategy will involve the following course of action

FILOIL will divide the Palawan market into FOUR (4) MARKET TERRITORIES:

– UPPER NORTH will include the municipalities of Busuanga, Coron, Culion, Cuyo, Linapacan, Agutaya, Magsaysay

– NORTH will be El Nido, Taytay, San Vicente, Roxas, Dumararan, and Araceli

– CENTRAL will be Puerto Princesa City, Aborlan, Kalayaan, and Cagayancillo

– SOUTH will be Espanola, Narra, Quezon, Rizal, Brooke’s Point, Balabac, and Bataraza

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Market Strategy

The Market strategy will involve the following course of action

FILOIL to set-up at least ONE (1) PORTAGAS Station per Town:

Upper North: 7 PORTAGAS Stations

North: 6 PORTAGAS Stations

Central: 7 PORTAGAS Stations

South: 8 PORTAGAS Stations

28 PORTAGAS Stations

FILOIL to strategically locate and set-up a SUPPLY DEPOT within the

FOUR (4) MARKET TERRITORIES (with a storage capacity of 300 kl per

Depot)

Upper North: Coron town

North: Roxas town

Central: Puerto Princesa City

South: Narra town

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Market Territory PROFILE FILOIL Expansion Program for Palawan Province

UPPER NORTH TERRITORY: Busuanga, Coron, Culion, Cuyo, Linapacan,

Agutaya, Magsaysay

NORTH TERRITORY: El Nido, Dumaran, Roxas, Taytay, San

Vicente, Araceli

CENTRAL TERRITORY: Puerto Princesa City, Kalayaan,

Aborlan, Cagayancillo

SOUTH TERRITORY:

Espanola, Narra, Brookes Point,

Rizal, Quezon, Bataraza, Balabac

LEGEND:

SUPPLY DEPOT FACILITIES

(Coron, Roxas, Puerto Princesa

City, Narra)

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Market Strategy

FILOIL to SELECT and APPOINT FOUR (4) BUSINESS

PARTNERS who will each manage and operate an

assigned Market Territory. Scope of responsibilities

include the following:

– Operate and Manage the Supply Depot

– Operate their own PORTAGAS STATION

– Recruit and Appoint PORTAGAS STATION

OPERATORS in each town within the assigned

market territory

– Supervise and Assist the PORTAGAS STATION

OPERATORS in their retail operations

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Market Strategy

FILOIL’s FOUR (4) BUSINESS PARTNERS will

focus on the PORTAGAS STATION RETAIL

OPERATIONS AND SUPPLY DEPOT

OPERATIONS ONLY.

FILOIL to Solely HANDLE the WHOLESALE,

COMMERCIAL & INDUSTRIAL FUEL SALES

OPERATIONS through its designated Palawan

Business Representative.

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Market Strategy Overview

FILOIL

RETAIL MARKET WHOLESALE, COMMERCIAL,

INDUSTRIAL MARKET

BUSINESS PARTNER PALAWAN BUSINESS

REPRESENTATIVE

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Market Strategy Overview

RETAIL MARKET

Tricycle

Multicabs & Jeepneys

Trucks

Buses

Motorcycle

Cars & SUVs

Small & Medium

Marine Transport

Units

WHOLESALE, COMMERCIAL,

INDUSTRIAL MARKET

Wholesalers/Traders

Mining Companies

Shipping Companies

PALECO & NAPOCOR

Multinational/ Big Companies

with Distribution (Warehouse)

& motorpool facilities

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Project Viability

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Project Viability

Capital Investment for SUPPLY DEPOT

Land Development & Construction Cost: Php 10 M (including piping, lighting & electrical, and concreting & other

structures)

Storage Tanks (30,000 Liters capacity x 10): Php 5 M

(Fabrication Cost/Tank: Php 500,000 x 10 units)

ESTD TOTAL COST FOR FOUR (4) SUPPLY DEPOTS:

Php 15M x 4 = Php 60 M

Land dev’t & constn cost Php 40M

Storage TanK Fabrication Php 20M

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Project Viability

Capital Investment for PORTAGAS STATIONS

Complete set-up including structures, pavement, pump and tanks,

pipings, signages, and lightings: Php 5 M

ESTD TOTAL COST FOR TWENTY EIGHT (28) PORTAGAS

STATIONS: Php 5M x 28 units = PHP 140 M

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Project Viability

ESTD TOTAL COST FOR FOUR (4) SUPPLY

DEPOTS: Php 15M x 4 = PHP 60 M

ESTD TOTAL COST FOR TWENTY EIGHT (28)

PORTAGAS STATIONS: Php 5M x 28 units

= PHP 140 M

TOTAL INVESTMENT COST = PHP 200 MILLION

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Projected Volume

ESTD TOTAL VOLUME FOR TWENTY EIGHT (28) PORTAGAS STATIONS:

Average Daily Volume: 3,500 Liters per PORTAGAS STATION

Average Monthly Volume: 105,000 Liters per PORTAGAS STATION

Estd Total Volume per Month for 28 PORTAGAS STATIONS: 28 X 105,000 Liters = 2,940,000 Liters per Month

ESTD TOTAL VOLUME FOR COMMERCIAL/ INDUSTRIAL SALES: 1,000,000 Liters per Month

ESTD COMBINED VOLUME PER MONTH:

3,940,000 Liters per Month

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Resources

FILOIL has a dedicated Self propelled Motorized Fuel Barge with a storage capacity of 1,000,000 liters per voyage.

FILOIL has a team of personnel that would handle the entire business operations.

FILOIL has a standing Supply Arrangement with TOTAL PHILS. that may be explored to sustain the project.

FILOIL was already able to identify and appoint the FOUR (4) Business Partners for Palawan, although contract finalization is still up for the three (3) Business Partners.

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Schedule

Construction & Operational schedule milestones

for Supply Depot Facilities

Jan Feb Mar Apr May Jun July Sep Oct Nov Dec

Central Depot Const’n

South Depot Const’n

North Depot Const’n

Central Depot Operational phase

South Depot Operational phase

North Depot Operational phase

Upper North Depot Const’n Upper North Depot Operational phase

2013

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Current Status

High-level overview of progress against schedule

– Central Depot already in permitting and documentation stage. The site is ready for construction

– South Depot is finalizing its contract with Business Partner. The site is ready and identified.

– North Depot is identified and contract is still up for finalizing with Business Partner

Overview of PORTAGAS STATION progress

We have one (1) PORTAGAS Station already in its operational phase, located at North Road, Tiniguiban, Puerto Princesa City. It is situated on the Central Depot site. Construction of ONE (1) PORTAGAS Station each for the South and North Territory will commence at the same time the South and North Depot Facilities are begun.