Date 2021-10-01
Media communiqué
Global price of LP gas increased to an unprecedented amount of 800 USD per tonne on October 1, 2021. When converted directly to a 12.5kg Cylinder, the cost of product adds up to Rs. 2,021. However, at present, the price of a 12.5kg Litro gas cylinder is set at Rs 1,493, and once the shipping, insurance and other necessary costs are taken into account, the additional cost of manufacturing a 12.5kg LP gas cylinder accounts to Rs 700. Accordingly, the cost of manufacturing a 12.5kg LP gas comes up to Rs 2,800. As a result, Litro Gas Lanka will be compelled to increase the price of a domestic gas cylinder to Rs 2,800 in order to cover the cost of purchase, shipping, insurance and other necessary expenses.
The decision to not increase gas prices parallel to cost fluctuations during the past 9 months resulted in a loss of Rs 10.5 Bn for Litro Gas Lanka. As a result, the Company is currently facing a financial crisis, which means that if the Treasury does not grant monetary assistance to purchase LP gas, Litro Gas Lanka will not be able to import LP gas from November onwards. The monthly cost of purchasing LP gas for the entire country is 30 Mn USD. Can the Government afford such a hefty expense? If the current status quo remains unaddressed, Sri Lanka will face a LP gas crisis in the coming months.
Litro Gas Lanka has already reached out to all relevant authorities, informing each entity at length about the nature of the potential crisis. However, none of the relevant authorities have taken action to resolve the issue, leading the Company to believe that the authorities are either willing to allow Litro Gas Lanka to become bankrupt or plans on sabotaging the Government.
If the authorities fail to address the issue in time, the situation would escalate leading to; a scarcity of LP gas that will negatively impact the public, loss of trust in the Government, and the bankruptcy of a previously profitable state-owned enterprise. Notwithstanding in action that would lead to these crises, the burden of unnecessarily high LP gas prices will inevitably fall onto the public.
Given the status quo, it is imperative to increase the price of a 12.5kg gas cylinder by Rs 1,200. Failing to do so will lead to the Treasury having to bear the additional cost, a burden that it is ill-prepared to handle given the state of the economy.
Meanwhile, the fact that only LAUGFS Gas, a private company was the only LPG player that benefited from the LPG price hike of Rs 363 per 12.5kg cylinder remains an unsolved mystery.
Moreover, establishing a separate Company named, Siyolit (Pvt) Ltd Lanka to import LP gas to Sri Lanka is not a feasible solution to the complicated problem of gas price anomalies. Attempts to establish the aforementioned Company is merely a covert stratagem to allow a handful of individuals and groups to earn an unscrupulous income.
While Litro Gas Lanka partnered Siyolit (Pvt) Ltd Lanka at first, Litro later withdrew from the partnership and directorships of Siyolit after informing Secretary to President of Sri Lanka Dr P B Jayasundara.
Litro Gas Lanka has been in operation for 150 years (during which Shell Gas managed the Company between the years 1995 to 2000), and employs 225 permanent staff. Armed with years of experience and insights, Litro Gas Lanka has heretofore been an efficient, profit generating business worth Rs 50 Bn that enjoys 80 percent of the market share.
We hope that the President and relevant authorities will intervene to resolve the current crisis.
