Lao Government Initiates Privatization of State Fuel Company in Major Reform Effort

Government Unveils Restructuring Plan for State Fuel Company

The government of the Lao People's Democratic Republic is moving forward with a significant reform, announcing plans to restructure the Lao State Fuel Company (LSFC) into a public-private joint venture. This initiative was presented to the National Assembly on November 13, 2025, during its 10th Ordinary Session, which runs from November 10 to 21. The restructuring is a key component of the government's broader strategy to overhaul major state-owned enterprises (SOEs) and enhance economic performance.

Details of the Proposed Joint Venture

Under the proposed structure, the Lao government intends to maintain a majority stake, retaining at least 51 percent ownership in the LSFC. This measure is designed to ensure continued national control and safeguard public interests. The LSFC is actively seeking partnerships with financially capable private investors to inject capital, improve operational efficiency, and strengthen its financial standing.

To facilitate a smooth transition and ensure robust operational planning and asset valuation, authorities are in the process of selecting a reputable international consulting firm. Leading global firms such as KPMG, Deloitte, PwC, or EY are being considered for this advisory role.

LSFC's Role and the Rationale for Reform

Established in 1976, the Lao State Fuel Company has historically operated as a 100% state-owned enterprise, playing a crucial role in stabilizing the petroleum energy supply for national socio-economic development and security. The company has maintained a significant presence in the domestic fuel market, holding a market share of over 30%. Its extensive infrastructure includes seven branches across major provinces, fuel depots and warehouses with a total capacity of 26 million liters, a laboratory, and 326 gas service stations nationwide.

Despite its long-standing role, the restructuring is driven by the government's aim to address persistent financial losses and improve management practices across its SOEs. This reform aligns with a wider agenda to enhance the efficiency and financial health of state-owned entities.

Broader Economic Context and Future Outlook

The privatization of LSFC is part of a comprehensive reform package targeting several key state-owned enterprises. Other entities slated for similar restructuring include Electricité du Laos (EDL), Lao Airlines, and Nayoby Bank. Notably, as part of this broader effort, China's Commercial Aircraft Corporation of China (COMAC) is set to acquire a 49 percent stake in Lao Airlines, with the Lao state retaining 51 percent.

This wave of reforms comes amidst ongoing economic challenges in Laos, including efforts to manage sovereign debt, stabilize the currency, and boost foreign reserves. The government has previously engaged in joint ventures for energy projects, such as a 20% stake in the Lao-China Dongyan Petrochemical Co., Ltd. for an oil refinery and a 22.5% stake in a biofuel production project with South Korea's GAIA Petro Co., Ltd. These strategic partnerships are intended to attract foreign investment and foster sustainable economic growth in the Lao People's Democratic Republic.