Lao State Fuel Company to Become Public-Private Joint Venture Amid Broader SOE Reforms

Government Initiates Restructuring of State Fuel Company

The government of the Lao People's Democratic Republic is moving forward with plans to transform the Lao State Fuel Company (LSFC) into a public-private joint venture. This significant restructuring initiative was detailed in a report presented to the National Assembly on November 13, 2025, during its 10th Ordinary Session, which runs from November 10 to 21. The decision underscores the government's commitment to a broader overhaul of its major state-owned enterprises (SOEs).

Strategic Objectives Behind the Privatization

The primary goal of this restructuring is to enhance the operational efficiency and strengthen the financial position of the LSFC. Officials have indicated that the company is actively seeking partnerships with financially capable private investors. Under the proposed structure, the government will maintain a controlling interest, retaining at least a 51 percent stake to 'protect national interests' and ensure continued oversight.

This move is part of a wider government reform agenda aimed at improving management practices and addressing persistent financial losses across various state-owned entities. The government has been engaged in SOE reforms since at least 2021, with the objective of improving the business environment and facilitating the country's graduation from Least Developed Country status by 2026.

LSFC's Role and Future Guidance

Established in 1976, the LSFC has historically operated as a 100% state-owned enterprise, playing a crucial role in stabilizing petroleum energy for national socio-economic development and security. It has been a dominant force in the domestic fuel market, holding a market share of over 30%. The company boasts an extensive infrastructure, including seven branches in major provinces, fuel depots, warehouses with a total capacity of 26 million liters, and 326 gas service stations nationwide.

To ensure a smooth transition and effective implementation, authorities are in the process of selecting a reputable international consulting firm, such as KPMG, Deloitte, PwC, or EY, to provide expert advice on operational planning and asset valuation.

Broader Context of State Enterprise Reforms

The restructuring of LSFC is not an isolated event but rather a key component of the Lao government's comprehensive reform strategy for its state-owned sector. Other prominent SOEs slated for similar restructuring include Electricité du Laos (EDL), Lao Airlines, and Nayoby Bank. Notably, Lao Airlines recently saw China's Commercial Aircraft Corporation of China (COMAC) acquire a 49 percent stake, with the state retaining 51 percent.

These reforms reflect a concerted effort by the Lao PDR to address economic challenges, improve governance, and foster a more dynamic and efficient economy through increased private sector participation.