SIGH OF RELIEF AFTER A PATIENT WAIT?

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Following a 30-day pause in distribution of Litro LP Gas Litro Gas Lanka Ltd resumed distribution last week under strict security and streamlined procedures.

Following the last shipment of 3,900 metric tons (MT) of Litro LP Gas for USD 3.9 million on 15 June, three ships carrying 3,700 MT, 3,740 MT, and 3,200 MT of LP Gas arrived on 10, 11, and 15 July, respectively. Overall, 33,000 MT of LP Gas had been ordered for this month.

Gas shipments are also expected on 20, 22, 24, 29, and 31 July. The current LP gas shortage in the country will be resolved by 31 July, according to Chairman of Litro Gas Lanka Ltd. Muditha Peiris.

However, Litro Gas Lanka Ltd has announced that the maximum retail price of a 12.5 Kg domestic LP gas cylinder in Colombo is currently Rs 4,910 and has warned customers not to buy LP gas at higher prices or from third parties. To prevent excessive stockpiling, it also requires customers to declare their May electricity bills as a means of identificationwhen purchasing gas.

Regional distribution

After several months of Litro gas scarecity across the island, a lorry carrying gas cylinders arrived on 13 July much to the relief of a large number of people waiting impatiently at the Badulla town Litro gas outlet. According to a sales agency spokeswoman, approximately 1200 gas cylinders were delivered to Badulla, and with the recent price increase, a gas cylinder would now cost Rs5,215.

After 33 days of stocking 1160 gas cylinders, Homagama LItro Gas Sales Center received LP gas on 11 July. As a result, the agency stated that steps were taken to successfully distribute the gas cylinders with the assistance of the Homagama Police. Since 7 June, this sales centre has implemented a new method of selling gas that requires customers to bring their ‘certificate of residency’. With this system in place over 2,500 customers have since registered with the respective gas stations.

Saranga Pathirana, the head of the Center and Uva Provinces Litro Gas dealer, said 12.5 kg domestic gas cylinders were distributed to Litro gas dealers in Nuwara Eliya and Maskeliya on 14 July. He said 1000, 12.5 kg domestic gas cylinders were distributed to dealers in Nuwara Eliya and 500, 12.5 kg gas cylinders to dealers in Maskeliya.

Producing the Customers’ May electricity bills proof of being a resident of the area together with keeping a record of all such purchases by the respective gas stations is a control measure taken to avoid duplication of sales and unnecessary stockpiling. Both domestic and commercial gas cylinders will be issued to Litro gas dealers in other cities of the Nuwara Eliya district in the coming days, he added.

Speedy distribution on large scale

Litro Gas Lanka Ltd began distribution of 30,000 cylinders in Colombo on 12 June and 120,000 gas cylinders (12.5kg) will be distributed throughout the country starting tomorrow (13) according to Pieris. He told the media that 80,000, 12.5 kg cylinders, 20,000 5kg cylinders, and another 20,000, 2.3kg cylinders will be distributed on 13 July, as promised.

On 14 July, the company distributed 50,000 gas cylinders in the outer provinces and 50,000 gas cylinders in the Colombo district. Police assistance was also obtained.

What went wrong earlier?

Chairman Peiris described the negotiation process for the contingency order, saying that SIAM Gas of Singapore offered the lowest rate of USD 96 as the shipping cost for an MT of LPG for the 2022/2023 tender but refused to release the consignment until a USD 30 million standby Letter of Credit (SBLC) was provided. Furthermore, SIAM Gas informed that the required quantity of 15,000 MT could not be supplied, but that 6,600 MT could be arranged instead, 10 days from the date of the Letter of Credit (LoC). It has also been notified that this consignment would be delivered for USD 112 rather than the previously quoted USD 96.

Nevertheless, Litro Gas had chosen the second lowest bid of a minimum quantity of 100,000 MT at USD 129 from Omani Trading (OQ Trading) based on the decision made at the Cabinet meeting on June 8 – taking feasibility and time considerations into account. The USD 17 difference between the two bidders in question translates to less than Rs 80 per cylinder, which is not a significant burden in comparison to the inconvenience caused by the market’s lack of LPG.

Litro Gas Lanka clarified that SIAM Gas was excluded from this contingent purchase not due to a ‘commission’ issue, as falsely portrayed by certain media reports, but rather due to the supplier’s stipulations and demands at this critical juncture. Logistical constraints, such as a lack of adequate delivery vessels, were also reasons for ruling out SIAM Gas as a supplier for the contingency shipment as well as the long term. SIAM Gas was unable to confirm the total requirement of four vessels over a six-week period.

The vessel assigned to the Spot (contingency) was also over 26 years old. All these factors had contributed to Litro Gas’s search for more dependable suppliers in the short and long term. The initial Cabinet approval to secure LPG from SIAM Gas was granted two months ago during the tenure of the previous Chairman but did not materialise, so the tender was awarded to the next best alternative, OQ Trading, to expedite the process.

Litro Gas Lanka spent a staggering Rs11.1 billion from November 2019 to December 2022 to keep the price of an LPG cylinder constant so that LPG was affordable to the average household, which coincided with Covid-19 lockdowns.

Litro Gas Lanka is one of the most profitable SOEs in Sri Lanka, with only 225 permanent employees, a testament to its efficiency and productivity. During the last decade, the company paid an unprecedented dividend to the National Treasury of Rs13 billion, which was primarily used for nation-building activities. Furthermore, Litro Gas Lanka met its responsibilities as a socially responsible corporate by paying Rs.34.5 billion in taxes over the last decade. Litro Gas Lanka, the national LPG provider, requests the cooperation of all stakeholders to quickly resolve the current crisis and restore normalcy.

Nagananda Petition

A Writ petition was filed in the Court of Appeal seeking an Interim Order restraining the implementation of Litro Gas Lanka Ltd’s decision to purchase domestic LP Gas from a private company at a rate of USD 129 per MT. The petition sought the issuance of a Writ of Mandamus ordering the Litro Gas Company to purchase domestic LP gas at a lower price instead of a higher price.

Nagananda Kodituwakku, General Secretary of Vinivida Foundation, filed the petition.

Chairman Peiris, Prime Minister Ranil Wickremasinghe, his Advisor Sagala Ratnayaka, Siam Gas Trading Pvt Ltd, O Q Trading Limited, Activs Oil Industry Suppliers Ltd, and the Attorney General are among the eight respondents named in the petition.

According to the petition, the respondent Litro Company decided to make immediate purchases (Spot Purchase) as a solution to the country’s current domestic LP gas crisis.

According to the petition, tenders were called, and three companies had submitted Bids.

According to the tenders, Siam Gas Trading Company agreed to supply 280,000 metric tonnes of gas at a rate of USD 96 per MT including shipping and insurance charges, and the Cabinet had approved it, as per the petition. However, the petition states that the respondent Litro Gas Company has entered into new agreements to purchase from a company called Activs Oil Industry Suppliers at a rate of USD 129 per MT of gas.

The petitioner claims that the respondents Litro Gas Lanka Ltd Chairman Muditha Peiris, Prime Minister Ranil Wickremesinghe, and his Advisor Sagala Ratnayaka have committed serious financial irregularities by deciding to buy gas at a higher price when they there was a bidder offering at a lower price.

The petitioner has stated that purchasing gas at higher prices is a huge waste of public money. As a result, the petition seeks a Writ of Certiorari to quash the agreement made to purchase gas from a private company for USD 129 per MT.

The petition also has sought the issuance of a Writ of Mandamus directing the respondents to procure LP gas at the lowest price for the benefit of the consumers.

BY Thameenah Razeek