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Sri Lanka will not allow any sudden hike in domestic LPG gas prices right away, even if global crude rates continue to gallop, the Government’s Industry and Commerce Minister asserted.
“Your support to the Government and Sri Lankans right now is very important. Our priority is to safeguard the consumers,” stressed Industry and Commerce Minister Rishad Bathiudeen yesterday at the Ministry of Industry and Commerce.
Minister Bathiudeen, joined by his officials from the Consumer Affairs Authority (CAA), Secretary to the Ministry of Industry and Commerce K.D.N. Ranjith Ashoka and Public Enterprise and Kandy City Development Minister Lakshman Kiriella, was addressing representatives of Sri Lanka’s largest LPG importer, cylinder distributor and supplier Litro Gas Lanka (LGL).
The Litro representatives were making a strong call on Minister Bathiudeen and the CAA to upwardly revise the “transport cost component” within the LPG pricing formula already agreed by with the CAA.
Litro representatives said that the diesel costs had continuously escalated since 2007, causing their LPG transport costs to rise too, thereby eroding their margins. The costs have come to a level where they cannot profitably operate anymore and the industry is facing an imminent shutdown if it continues down this path. The representatives then handed over their proposal to hike LPG rates to Minister Bathiudeen, calling for an increase to the ‘transport cost component’ of the LPG gas price formula.
The CAA officials reiterated that Sri Lankan domestic LPG prices in the market were now determined by a pricing formula agreed between the two LPG players (LGL and Laugfs) and the CAA, and ad hoc changes were adverse to consumers and households that were heavily dependent on the cylinders. “We commend you, the LPG gas suppliers, for your continued service to our consumers. There have been changes in global market LPG rates as well as local transport costs due to international crude oil price hikes,” said Minister Bathiudeen, adding: “The crude price hike is hurting our economy in many ways and the LPG industry is no different. At present global crude oil prices are at a four-year high and our consumers are facing the impact directly. Very recently in CAA’s 27 September determination, we already allowed district-to-district LPG prices with adjustments for transport, which is the pricing framework now in effect. Revising these already revised LPG market prices again at this moment is very damaging to our consumers. I shall still forward your proposals to Head of the Cost of Living Committee, Minister Malik Samarawickrama as well as to the Finance Ministry immediately and await their input.”
Litro representatives agreed with Minister Bathiudeen’s assessment that any sudden LPG price revisions were harmful to Lankan consumers. They said they would assist the Government’s efforts to safeguard consumers however they requested the Minister to consider their proposals as well.
During yesterday’s meeting, Minister Bathiudeen also instructed CAA officials to evaluate Litro proposals and report back to him. Earlier, on 27 September 2018, the CAA issued a district-to-district determination on Maximum Retail Prices for LPG cylinders, which is now in effect island-wide.
Thus for Colombo District, a 12.5 kg cylinder is available at Rs 1733, 2.3 kg cylinder at Rs. 319, and 5 kg cylinder at Rs. 693. For other districts, the CAA even allowed sellers to add a fixed transport cost, which is not applicable to the Colombo District. Thus, for example, in the Jaffna District the 12.5 kg cylinder, with transport cost adjustments, can be sold at an MRP of Rs. 1853, 2.3 kg cylinder at an MRP of Rs. 335 and 5 kg cylinder at an MRP of Rs. 753. Similarly, using the same ratio, prices for other districts are now set as: Gampaha 12.5 kg at Rs. 1,744, 2.3 kg at Rs. 335, and 5 kg at Rs. 698, Kalutara 12.5 kg at Rs. 1,752, 2.3 kg at Rs. 337, and 5 kg at Rs. 703, Puttalam 12.5 kg at Rs. 1,768, 2.3 kg at Rs. 338, 5kg at Rs. 708, Kegalle 12.5kg at Rs. 1772, 3.2 kg at Rs. 340, 5 kg at Rs. 713, Kurunegala 12.5 kg at Rs. 1,771, 2.3 kg at Rs. 340, 5kg at Rs. 713, Galle 12.5 kg at Rs. 1,775, 2.3 kg at Rs. 341, 5 kg at Rs. 713, Ratnapura 12.5 kg at Rs. 1,775, 2.3 kg at Rs. 339, 5 kg at Rs. 713, Kandy 12.5 kg at Rs. 1,785, 2.3 kg at Rs. 341, 5 kg at Rs. 718, Matara 12.5 kg at Rs. 1,788, 2.3 kg at Rs. 343, 5 kg at Rs. 718, Matale 12.5 kg at Rs. 1,789, 2.3 kg at Rs. 342, 5 kg at Rs. 723, Trincomalee 12.5 kg at Rs. 1,811, 2.3 kg at Rs. 346, 5 kg at Rs. 733, Anuradhapura 12.5 kg at Rs. 1,809, 2.3 kg at Rs. 345, 5 kg at Rs. 733, Polonnaruwa 12.5 kg at Rs. 1,809, 2.3 kg at Rs. 344, 5 kg at Rs. 733, Vavuniya 12.5 kg at 1810, 2.3 kg 340, 5 kg at 733, Mannar 12.5 kg at 1828, 2.3 kg 340, 5 kg at 743, Hambantota 12.5 kg at Rs. 1,811, 2.3 kg at Rs. 346, 5 kg at Rs. 733, Monaragala 12.5 kg at Rs. 1,842, 2.3 kg at Rs. 347, 5 kg at Rs. 748, Badulla 12.5 kg at Rs. 1,829, 2.3 kg at Rs. 346, 5 kg at Rs. 743, Ampara 12.5 kg at Rs. 1,846, 2.3 kg at Rs. 348, 5 kg at Rs. 748.00, Nuwara Eliya 12.5 kg at Rs. 1,823, 2.3 kg at Rs. 344, 5 kg at 738, Batticaloa 12.5 kg at Rs. 1,844, 2.3 kg at Rs. 348, 5 kg at Rs. 748, Kilinochchi 12.5 kg at Rs. 1,837, 2.3 kg at Rs. 342, 5kg at Rs. 778 and Mullaitivu 12.5 kg at Rs. 1,836, 2.3 kg at Rs. 343 and 5 kg at Rs. 778. The CAA can raid any seller who violates these LPG MRPs. According to Section 60 of CAA Act No. 9 of 2009, conviction results in fines and even imprisonment. Section 60 - subsection 4 (i.e. S 60.4) defines the penalties. S.60.4 (a) pertains to individuals, slaps a Rs. 5000-50000 fine and/or up to one year’s imprisonment for first-time offenders and for subsequent violations, Rs. 10,000 to 100,000 fine and/or up to two years’ imprisonment. S60.4 (b) pertains to violations by corporations, slaps Rs 50,000- Rs 1 million fine for first-timers and for subsequent violators, a Rs. 100,000 to Rs 2 million fine.
Earlier on 3 October, Reuters reported that Brent oil futures “are at a four-year high at $ 86.74 a barrel.”
