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Laugfs claims financial ill health cause for stopping domestic gas supplies
Domestic customers are now left without Laugfs gas. Pic by Eshan Fernando
Laugfs Gas Plc, the partner in the duopoly in the country’s domestic supply of liquid petroleum gas (LPG ), last week, said that it would inform its 30% domestic customers this week about its inability to supply gas.
Chairman, W K H Wegapitiya said the company was unable to continue supplies under the present circumstances as it would only worsen financial losses over the past nine months.
He said that although discussions were held last week with the Government, a decision was not taken in favour of a price increase.
The company has distributed 2.9 million cylinders and has a network of 31 distributors and 15,000 dealers.
Mr Wegapitiya emphasised the need of a fair pricing system if it were to stay in business.
He said the company had supplied LPG below cost for about eight months and that it could no longer do so unless the Government allowed a reasonable price increase.
The company has been lobbying for a price increase of the regulated 12.5 kilogram domestic cylinder citing the spiralling cost of imports driven by the depreciating rupee and increasing cost of freight caused by delays in arrival of shipments because of the pandemic.
The company said State banks have run out of US dollars making it difficult to open Letters of Credit on time.
With a single consignment costing over US$ 4.5 million, state banks have refused to honour the company’s LCs, Mr Wegapitiya said.
The company is lobbying for an increase of Rs700 per 12.5 kg cylinder.
The company continues to serve commercial and industrial customers.
Domestic customers, now left without Laugfs gas, said it was unfair for the company to abandon its customers. Meanwhile, wayside eateries and tea kiosks which depended on Laugfs gas are forced to limit their food production, winding up early for the day.
Litro Gas, which holds 70 percent of market share, said that it has enough gas to be distributed for the next three months.
It had even offered to fill the yellow cylinders to help out the Laugfs customer base, but the offer was not considered due to legal impediments.
Litro Gas Chairman, Thesara Jayasinghe said last week it had offered three proposals through the Consumer Affairs Authority (CAA) including selling bulk gas to Laugfs; allow Litro Gas to manage refilling for Laugfs domestic customers for a specific period until it is ready to get back on track; and Litro to service Laughs bulk customers while it (Laugfs) focuses on serving domestic customers.
However, there has been no response from Laugfs Gas Plc, Jayasinghe said.
Litro Gas on a normal day fills around 80,000 litres in around 95,000 cylinders (12.5kg).
It has withdrawn its controversial 9.5 kgs cylinder from the market following the Government clamping down on the price.
However, customers have also faced shortages with Litro Gas agents turning back customers.
Mr Jayasinghe said the shortage may be due to panic buying by customers who are hoarding gas.
“For the last 10 days we have distributed over 100,000 litres daily. It is not a shortage and will ease soon,’’ he said.