Litro Gas Lanka is looking at the possibility of bulk-buying as opposed to ad-hoc purchasing of domestic LP gas, to manage the domestic demand moving forward, and to eliminate long queues, the company said.
The spokesperson for Litro Gas Lanka said the Government had given the greenlight topursue the proposed plan in order to mitigate the current national crisis for LPG: “Despite theshortages, Litro Gas Lanka has consistently catered to the demand from BOI, Export ProcessingZones and other export-oriented industries and sectors that are critical to the economy bringingin much-needed forex. Moreover, Litro Gas Lanka single-handedly managed to cover thecountry’s critical industries — including the HORECA category – undertaking the challenge ofcatering to its own demographic as well as the market segment dependent on its competitor, theonly other LPG supplier, for the duration of 3-4 months it was unable to actively meet thedemand.”
Detailing the negotiation process for the contingency order, he said that SIAM Gas of Singaporeoffered the lowest rate of USD 96 as the shipping cost for a Metric Ton (MT) of LPG for the2022/2023 tender but failed to release the consignment until a standby Letter of Credit (SBLC)to the value of USD 30mn was furnished. Further, SIAM Gas had also informed that the requiredquantity of 15,000 MT couldn’t be provided but 6,600 MT could be arranged instead, 10 daysfrom the date of LOC. It was also informed this consignment would be provided at USD 112instead of formerly quoted USD 96.
As such, Litro Gas opted for the second lowest bid of a minimum quantity of 100,000 MT at USD129 from Omani Trading (OQ Trading) based on the decision taken at the Cabinet meeting heldon 8 June– taking into account the feasibility and time considerations. The USD 17 differencebetween the two aforementioned bidders translates to less than Rs 80 per cylinder, which isnot a significant burden proportional to the inconvenience faced by the public due to lack of LPGin the market.
Litro Gas Lanka wished to clarify that SIAM Gas was left out from this contingent purchase notdue to an issue involving commissions as falsely claimed by certain media reports but ratherdue to the stipulations and demands put forward by the supplier at this critical juncture. Logisticallimitations such as not having adequate vessels for delivery was also a reason for ruling outSIAM Gas as a supplier for the contingency shipment as well as the long term. The totalrequirement would have needed 4 vessels over a period of 6 weeks which SIAM Gas could notconfirm. Even the vessel allocated for the Spot (contingency) was over 26 years old. Thesefactors too contributed to Litro Gas looking for more reliable, dependable suppliers for the short and long terms.
The initial approval to secure LPG from SIAM Gas was granted by the Cabinet two months agoduring the tenure of the previous Chairman but did not materialize and it was against thisbackdrop that the tender was awarded to the next best alternative, OQ Trading, to expedite theprocess.
During the period Nov 2019 to Dec 2022 it has costedLitro Gas Lanka a staggering Rs11.1billion to maintain the price of an LPG cylinder at a constant rate so that LPG was affordable tothe average household, which coincided with Covid-19 lockdowns.
Litro Gas Lanka is one of the most profitable SOEs in Sri Lanka employing a cadre of only 225permanent staff which is a testament to its efficiency and productivity. The enterprise madeavailable an unprecedented dividend of Rs. 13 bn during the last decade to the NationalTreasury which is generally used for nation-building activities.
Furthermore, Litro Gas Lanka fulfilled its obligations as a socially responsible corporate bypaying Rs. 34.5bn as taxes during the past decade.
As the national provider of LPG, Litro Gas Lanka requests cooperation of all stakeholders toswiftly resolve the present crisis and restore normalcy.