Litro Gas says saved Rs 1.7 b via transparent LPG contract award

Executive Chairman Shalila Moonesinghe (right) and MD Muditha Pieris

Litro Gas, the largest national importer and market leader of Liquefied Petroleum Gas (LPG) in Sri Lanka, has made an enormous saving of Rs 1.7 billion from an unprecedentedly transparent tender award for the first time in the company’s history.

Litro’s existing LPG contract expires on the 31st of August 2016 but with current demand forecasts, Litro expects the contract to expire end-June 2016.

LitroGas advertised the tender for the supply of gas in newspapers of most important international supply hubs in addition to Sri Lanka. Local and foreign parties collected the tender documents paying the stipulated amount to bid for the tender out of which eight made their final bids. To ensure good governance and transparency a representative of the Ministry of Public Enterprise Development was involved for the first time in the process. For the first time in the History of LitroGas it also invited the parties who bid to be present to witness the tender opening.

The L.P.G tender was closed at 3 p.m. 27 May 2016. Around 3.15 p.m. the box containing the bids were brought to the Head Office Auditorium. At the time of opening the Bids the Executive Chairman of Litro Gas Lanka Ltd Shalila Moonesinghe and the Managing Director Muditha Peiris together with the Directors of Litro Gas Lanka Ltd, the Manager Procurement and the Managing Director Litro Gas Terminal Limited, an official from the Ministry of Public Enterprise Development and eight representatives of the bidders were present.

This was also the first time in the history of Litro Gas Lanka Ltd the representatives of the bidders were allowed to witness the opening of the tender and a representative of the Ministry too was closely observing the activity.

“The purchase of Liquefied Petroleum Gas (LPG) is not purely dependent on the price. There are many aspects of technical evaluations that are considered together with the respective pricing” said Litro Gas Lanka Ltd Executive Chairman Shalila Moonesinghe. The two criteria in the totality of overall evaluation are the ‘best price’ and ‘the best technical evaluation’. 

Among the safety aspects evaluated is the company’s strength vis-a-vis appropriate vessels. All LPG carriers(vessels) too should meet the criteria, as well as the number of ships owned by the company and the storage technical compliances. Executive Chairman Shalila Moonesinghe also stressed that Litro strictly goes by the good governance polices of the government under the guidance and supervision of Enterprise Development Minister KabirHashim and Finance Minister Ravi Karunanayake.

Litro’s evaluation sequence is Technical Evaluation followed by Commercial Evaluation. The company’s Technical Evaluation team carried out technicalevaluations along with the Public Enterprise Development Ministry official and Commercial Evaluation was carried out by another evaluation team.

The Tender board meeting was held with the participation of an official from the Public Enterprise Development Ministry. Managing Director Muditha Pieris said that both the technical and commercial evaluation teams, after evaluations, ranked and picked Shell Eastern Trading Ltd as number one winner to receive the tender award–a post-evaluation unanimous decision.  

Muditha Pieris also added that as the result of the transparent process, Litro saved Rs. 2.5 Billion from public money in the Treasury from the previous and the present contract. By awarding the contract to Shell Eastern Trading Ltd, the approximate saving to Litro and the Lankan public is around Rs 1.7 billion while the savings from the previous contract was Rs 800 million.

Therefore, the cumulative savings that the new Chairman, Managing Director, Directors and the management of LitroGas has reported from the transparent LPG contract process alone is at Rs. 2.5 billion.

The Executive Chairman and the Managing Director strongly believes that it was able to achieve this due to the good governance practices adopted and passed on to the Company by both the Ministry of Finance and the Ministry of Public Enterprise Development. As a result of this success, LitroGas will continue with its transparent selection, evaluation and award process in future as well. LitroGas also thanks all the participating bidders of the LPG tender.