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Litro says it can meet country’s LP gas demands even if Laugfs withdraws
As reports come in of outlets running out of Liquefied Petroleum (LP Gas) cylinders, arrangements are being made to ensure that there will be no gas shortages in the country from tomorrow (26), the Government said yesterday.
State-run Litro gas has been entrusted with the responsibility of ensuring that there is no gas shortage in the country and the company has assured that there will be enough gas at its distribution centres in the country from tomorrow, Consumer Protection State Minister Lasantha Alagiyawanna told the Sunday Times.
In response to media reports that Laugfs Gas was preparing to halt imports of LP gas imports, Litro Gas Chairman Theshara Jayasinghe issued a media release on Tuesday stating that they had the capacity to supply the volume should Laugfs halt imports. Mr Jayasinghe even claimed that his firm would be able to fill any cylinder of any colour should the situation arise.
Some Laugfs gas consumers, however, said on social media that Litro outlets were refusing to accept their cylinders despite the company chairman’s claims.
The Sunday Times contacted multiple Litro Gas outlets and were told that the outlets had even run out of large Litro gas cylinders of the 12.5 kilogram and 18-litre variety. Many Litro vendors said they had run out of stocks by Thursday and were still awaiting fresh supplies.
“There was a rush to purchase cylinders during the past two days, perhaps due to fears of a shortage. We have not yet been informed of when we will receive fresh stocks,” one vendor said.
While there might be some shortages as of now, Litro has assured that the situation will be rectified by Monday, Minister Alagiyawanna said.
The Government had earlier said that a 12.5kg cylinder of LP gas will be sold at Rs 1495 while Cabinet has also approved to sell the recently introduced 18-litre cylinder of Litro Gas at the reduced price of Rs 1150.
However, the 18-litre cylinder continued to be sold at Rs 1395 up until yesterday as the gazette announcing the price revision had still not been issued.
Laugfs has about a 30% market share in the domestic and commercial sector, and while it has not yet decided to stop gas imports, what will happen is that a “natural stoppage” of imports would occur, its Chairman W.K.H. Wegapitiya told the Sunday Times.
He pointed out that there are severe difficulties now in opening Letters of Credit (LCs) to import gas while banks themselves have a severe shortage of US dollars.
Pic by Eshan Frnando
“Imagine you buy mangoes at Rs 100 but the Government insists that you sell it at Rs 60. You will keep on doing it for one month, two months, nine months and so on. But if you keep doing it, then you will obviously go bankrupt,” Mr Wegapitiya said, explaining this was what was happening to them right now since the Government continuously rejects requests for a price increase.
World gas prices have gone up significantly over the past year, he pointed out. A metric tonne of LP gas hit USD 620 in July and is expected to climb to USD 700 in August. The rapid depreciation of the rupee, meanwhile, means that freight charges to import gas have also risen. To compound matters, the pandemic has also hit the shipping and logistics industry. A shipment that took a month can now take three months to arrive and cost far more.
“We are losing Rs 750-800 a cylinder now. Since LP gas is classified as an essential item, we have to get permission from the Consumer Affairs Authority (CAA) for a price revision. For the past year, we have factually presented our case to them almost every month. We have lobbied the CAA, the subject minister, the Trade Minister, the Prime Minister and the President, but sadly, no solution has been found,” the Laufgs Chairman claimed.
Reacting to the statement that Litro gas would accept cylinders of any color and fill them, the Laugfs chairman observed that such a move would run afoul of intellectual property laws.
Mr Wegapitiya lamented that the Government had not heeded repeated appeals made to rectify the situation and instead, had taken arbitrary decisions that had made the situation worse.
He said the plight faced by Laugfs Gas sends a very alarming signal to the entire business world. “Enterprises should take this seriously. This has already made international news. The country’s ease of doing business ranking will also suffer as a result.”
Litro Gas Chairman Theshara Jayasinghe, meanwhile, said yesterday that their distributors had 200,000 cylinders filled with gas across the country, and that they also filled 80,000 gas cylinders a day on a daily basis. “Therefore there is no gas shortage at the country level. But due to the news on impending (expected) price reduction (yet to take effect as the Gazette is not yet been issued), both the consumers and the agents had not been purchasing cylinders for the last three days to gain from the reduction and avoid any losses respectively,” he noted in a text message, explaining the reasons for why some outlets had run out of gas cylinders.
While this had been the case since news of the Cabinet decision up until Friday evening, agents have now started ordering stocks from yesterday as usual as there was another communication that the price revision had been put off till the next Cabinet meeting, Mr Jayasinghe added.
“Therefore we expect the situation to normalise, however, subject to the purchasing behaviour of the consumers and the agents based on any further news updates on price revisions,” he added.
The Litro chairman again emphasised that they have gas stocks to cater to the entire country, and that there was no gas shortage.
“With respect to Laugfs consumers, we are ready to cater, but this needs regulatory approval (from the CAA). I will send a written communication to the CAA and the relevant subject minister regarding the same on Monday. However if the need arises we will manage Laugfs agents separately not via our own (Litro) outlets once CAA approves such interference to protect the interests of the general public, in this case, the Laugfs consumers,” Mr Jayasinghe said.