Financial Times

Shell Gas troubles intensify with the Consumer Authority
Shell Sri Lanka is running deeper into financial trouble with its books (for the nine month period January to September 31, 2004) showing a loss of Rs. 186 million, the company said last week.

Much of this trouble has to do with the Consumer Affairs Authority's (CAA) repeated rejection of a price increase, officials explained at a press conference.

Shell, which ran a loss of Rs. 32 million in 2003, however is optimistic that some compromise with the authorities could be reached. Hassan Madani, the newly appointed managing director for Shell Sri Lanka, said negotiations are on the way and he hoped discussions with high ranking government officials could result in a win-win scenario.

Despite the competition in the LP gas industry thinning due to the lack of profitability, Madani revealed that they have no plans of looking back or even contracting on it's scale of operation in the foreseeable time. The company however is at a situation where Shell Gas loses at every cylinder produced and sold in the market.

This situation has been continuing for the last two months with the steep increase in crude oil- the primary raw material in the production of LP gas, explained Dr Mahesha Ranasoma- Head of Corporate Affairs. Unlike previous denials for price hikes, this time there had been no reason given by the CAA. The price of crude oil has been rising steadily since the disorder in the Middle East region.

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