LAUGFS Gas on recent price revision, way forward for sustainable LPG industry

In a media statement, LAUGFS Gas PLC stressed on the importance of the recent increase in the LPG retail price approved by the Consumer Affairs Authority, while elaborating on the macro-economic conditions that necessitated it.

The Saudi Aramco Contract Price is considered the primary international benchmark for LPG price regulations within the Arabian Gulf and Asian region, and a significant volatility in this Contract Price was seen directly impacting the LPG retails prices in Sri Lanka.

“There have been significant changes in the LPG prices in the international market, which has had a detrimental impact on the local LPG industry. During the period between May 2017 and January 2018 alone, a metric ton of LPG price has increased by almost 50%. In addition, the local LPG retail price is impacted by a number of other macro-economic factors. For example, the world steel prices have been on the rise, which increases the LPG cylinder manufacturing cost. The Rupee depreciation against the US Dollar is another important factor, that negatively affects the local LPG industry, when the costs of imports, transportation, import clearances, etc. increase,” remarked LAUGFS Group Chairman W.K.H. Wegapitiya.

“These have all had a damaging impact on the local LPG industry, as each cylinder was sold at a loss. With LPG companies continuously operating at a loss over a period of time, it had made the entire industry unsustainable, which necessitated a price increase to address negative repercussions not only to the industry, but also to the country’s economy,” he further elaborated.

LAUGFS Gas entered the local LPG downstream industry in 2001, and operates in the domestic, commercial and industrial sectors, employing over 350 staff and creating indirect employment opportunities for thousands.

“As a company that takes deep pride in our Sri Lankan heritage, LAUGFS Gas has been able to make a remarkable economic and social impact on our country for over 16 years. Our impact on our country is not simply limited to delivering trusted LPG solutions, assuring safety and quality. There are also hundreds and thousands of families who depend on us through the many employment and livelihood opportunities we have created within the country,” commented LAUGFS Group Managing Director Thilak De Silva.

“In the long term, there will continue to be global price volatility and other macro-economic factors, which are largely unpredictable, affecting the local LPG Industry. Therefore, we believe a fair and effective pricing formula based on key indicators would help address this situation, where consumers would be able to enjoy price benefits arising from decreasing market prices, while ensuring sustainability of the local LPG industry during times of rising world prices. This will provide a transparent, impartial and fair mechanism to determine the local LPG retail price in the long run,” he remarked.