Costly burns via LPG

By Charumini de Silva

Considering the rising world market prices and rupee depreciation, Litro Gas Lanka Ltd. yesterday said it would increase the price of a 12.5kg domestic LP gas cylinder by Rs. 195 from today.

In addition, prices of the 5kg domestic LP gas cylinder will also be increased by Rs. 78 and 2.3kg by Rs. 36.

Accordingly, the current price of the 12.5kg domestic cylinder, which was at Rs. 1,538, will go up to Rs. 1,733, while the price of the 5kg domestic LP gas cylinder of Rs. 615 will be increased to Rs. 693. The 2.3kg cylinder of Rs. 283 will go up to Rs. 319. However, the prices will vary according to different districts.

“Based on price applications submitted by both gas companies were passed by the Cabinet. The determination of the price was assigned to the Cost of Living Committee. Considering the rising world market prices and rupee depreciation, we sought for a Rs. 342 hike in prices, but the Consumer Affairs Authority (CAA) only approved a Rs. 195 increase yesterday,” Litro Gas Lanka Ltd. Director – Sales, Marketing and Corporate Affairs Chaminda Ediriwickrama told Daily FT.

He said this price increase was possible after continuous lobbying to the Authority since June. Noting that the world market prices are exogenous factors which cannot be controlled by countries, Ediriwickrama however predicted this upward trend in cost would continue till early next year.

He also clarified that this price increase had nothing to do with the appeal made by the LP Gas Distributors Association of Sri Lanka (LPGDASL) yesterday in Colombo.

“The demand made by LPGDASL to increase the 12% channel margin has not been included to the Rs. 195 increase in 12.5kg domestic LP gas cylinder. It has nothing to do with this price hike,” he assured.

Meanwhile, LPGDASL President Sathyendra Wijayapura claimed that despite the Government increasing the price of the 12.5kg LP gas cylinder by Rs. 195 yesterday, the distributors or dealers have not received any tangible benefit from the price adjustments.

“The Company has not considered giving a cent to the distributors’ from the Rs. 195 price hike announced yesterday, which could have cushioned our burden to some extent,” he added.

Acknowledging that there was no co-relation to the price hike and their media briefing yesterday, Wijayapura lamented that now the distributors were in a greater dilemma with having to find additional funds at a time when banks are refusing to provide loans to obtain adequate supply of LP gas cylinders. 

He said the Association is planning to meet the hierarchy of Litro Gas Lanka Ltd., soon.

Pointing out that the Company increased prices while putting the entire burden on the consumer, he said they will do the same with another price hike, claiming it is for the distributors, considering only their survival.

In 2015, following the drastic price revisions, Litro Gas Lanka was informed by the distributors that the delivery would collapse with eroded margins. Litro Gas granted an additional cushioning to the margin by 2.56% (Rs. 36for distributors and dealers) and added a maximum of Rs. 142.15 to the channel. However, there had been so many price changes that followed but the margin has been the same, he pointed out.

According to him, Litro sells 1.65 million LP gas cylinders a month, generating a revenue of Rs. 321 million monthly. Its contribution in terms of dividends to the national economy is Rs. 5 billion per annum.

“Our primary effort is to make the decision makers aware of the consequences and avoid the collapse of distribution, and all these related unnecessary inconveniences to the general public,” Wijayapura emphasised.

The regulation of gas business is under the CAA. The CAA signed an agreement on the prices in 2007 with then Shell and continued with Litro after the takeover. The same year, a pricing formula was introduced. Since then, there had been 36 price changes up to now.