Government will import urgent LPG stocks if necessary
View(s):The Government will strive to maintain Liquified Petroleum (LP) gas prices at current levels – despite demands to increase prices – and provide funds to the state-owned importer to import stocks if there is a shortage.
The Finance Ministry will intervene in the immediate purchase of LP gas from the international market as a remedy if there is any shortage in the market. Steps will be taken for the state-owned Litro Gas Company to import the stock and release to the market immediately if necessary, a senior Finance Ministry official who wished to remain anonymous, told the Business Times.
Sri Lanka’s two main gas suppliers have been lobbying the government authorities to increase the price of LP gas or to provide some subsidy or tax reduction to offset their heavy losses in LP gas imports in the face of sky- rocketing world gas prices amidst the rapid depreciation of the rupee.
The two companies (including Laugfs Gas) are now struggling to survive due to heavy losses as a result of high import and transport costs along with overhead expenditure in their day to day operations, top officials said.
However the Consumer Affairs Authority (CAA) is ready take stern action against traders if they create an artificial shortage in the market by hiding LP gas cylinder stocks to sell it at higher prices.
It will intensify raids in the coming days and will take legal action against such errant traders who could use a shortage as an opportunity to jack up prices, a senior CAA official said.
The Government is considering the introduction of LPG connections to households as a long term solution to the supply issue, he disclosed adding that the Finance Ministry is also aware of difficulties faced by suppliers.
LP gas suppliers have been lobbying the CAA for a price revision continuously during the past seven months W.K.H. Wegapitiya Chairman of Laugfs Holdings told the Business Times.
Further they used to provide international market price, rupee fluctuations and other relevant company data to the CAA once every two months in accordance with pricing formula requirement to determine the price of LP gas, he revealed.
But no action has been taken to remedy the situation which has aggravated till the gap between the selling price and the cost of import of LP gas per cylinder has widened to Rs. 700, he complained.
The new price revision mechanism, allows suppliers to revise the price of a gas cylinder based on the prevailing LPG World Prices (CP) and the Foreign Exchange rate every two months. But the CAA has to stipulate the price in consultations with the Consumer Affairs Authority the Cabinet Sub-Committee on Cost of Living and the Pricing Committee, he said.
Although there was a suggestion to increase the current price of Rs. 1453 per LP Gas cylinder by Rs. 450 sometime back it is yet to be implemented, he said adding that the present LPG price is very nominal as it will cost Rs. 5 per person per day for cooking purposes.
The two suppliers will go bankrupt if the CAA does not consider the price increase in the face of rising international LP gas prices which is now at $600 per metric tonne along with high international shipping and freight rates, he pointed out.
Litro Gas (LG) is also incurring a loss of Rs. 3 billion as a result of maintaining stable prices for a long period of one year, a high official of the company said. (BS)