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Govt. officials to take over purchase of Litro gas
A Government-appointed committee of officials headed by the Deputy Treasury Secretary is to take over the purchase of gas for the state-owned Litro Gas Lanka Ltd for the next six months, turning down a request by the company to increase prices.
The move came after the Cabinet sub-committee on proposed gas price increases this week put forward proposals on minimizing losses, a committee member and Environment Minister Mahinda Amaraweera told the Sunday Times.
As an initial step to cut down losses of the company, the Government has decided to suspend the use of a Rs 500 million allocation for “publicity”, he said.
The Government-appointed committee’s other members are a deputy director from the Central Bank and representatives from the Trade Ministry, the Import Controller’s Department and the Board of Investment. Two representatives from Litro Gas and LAUGFS Gas will also be included.
A senior Treasury official said the committee would rely on competitive bidding for the purchase of gas.
A gas terminal currently used by Laugfs with a capacity of 30,000 Mt at Hambantota will be used for storage, he said.
The committee to be appointed will also investigate the issues of wastage and other malpractices.
The company was recently pushing for an increase of gas prices claiming that it was incurring losses in view of a price hike in the world market. It sought a price hike of Rs. 600 for a 12.5 kg Cylinder of LP gas.
At the end of six months, the committee to be appointed would decide whether it would continue with the new purchasing arrangements, Mr Amaraweera said.
The move comes as the Government proposed for Litro Gas Lanka Ltd to buy 40 percent of the private LAUGFS Gas Terminal International Company (LGTIC) that operates a tank farm in Hambantota.
The public-private partnership (PPP) deal is seen by critics as the “Government bailing out LAUGFS” whose terminal project has incurred debts to the tune of Rs 12.12bn to the Bank of Ceylon and Rs 10.1bn to the People’s Bank. The two state-owned banks have said they cannot lend anymore to LGTIC.