Litro allowed to market its controversial hybrid LPG cylinders despite CAA’s objections

by Suresh Perera

In what industry players summed up as an “incredulous about-turn”, the trade authorities have given the green light to Litro Gas Lanka to market its controversial 18-litre premium hybrid domestic LPG cylinders at its original introductory price, despite strong objections by the Consumer Affairs Authority (CAA).

The launch of the new domestic cylinders triggered protests by consumers and interest groups as a 12.5-kilogram Litro cooking gas cylinder is sold for Rs. 1,493 in the market, whereas the 9.18 kilogram product has been priced at Rs. 1,395 in spite of the weight being reduced by three kilograms.

In other words, consumers are offered a regular 12.5-kilogram cylinder at Rs. 1,493, but for a mere one hundred rupees less, they have to be content with 9.18 kilograms of cooking gas at Rs. 1,395, industry officials said.

The weight has been given in litres instead of kilograms, as done on regular 12.5kg domestic cylinders, to deceive the public, they asserted.

State Minister of Co-operative Services, Marketing Development and Consumer Protection, Lasantha Alagiyawanna, conceded that Litro Gas has reduced the weight of its new hybrid cylinders introduced to the market and the public has to incur a financial loss as a result.

“We will be asking the CAA to inform Litro Gas to mark the weight in kilograms on the new cylinders and not in litres”, the State Minister told a news conference held at the Ministry on April 24.

It was also pointed out that a different color should be used so that consumers will be able to differentiate between the two products. Otherwise, it could lead to confusion as there’s a difference in weight between them.

“We have asked Litro Gas to withdraw the new cylinders from the market”, Asela Bandara, CAA’s Director of Information, told the media.

Litro had injected the new hybrid cylinders into the marketplace without the permission of the CAA, he said, while blaming the company’s top management for the lapse.

Warning that Litro Gas could face legal action in this regard, Bandara said the CAA has asked the company to stop distribution and withdraw existing stocks from the market.

However, at a meeting on Tuesday evening, State Minister Alagiyawanna gave the go-ahead to Litro to sell the new cooking gas cylinders at the introductory price.

Despite his admission earlier that the public will suffer a financial loss due to the difference in weight, the coast is now clear for the company to market its newly introduced product at the original price of Rs. 1,395, industry officials said.

“The color of the cylinders is bound to change but not the weight”, they said.

Referring to the meeting between the State Minister and Litro officials, the company said in a statement that it was decided “to ensure that 12.5kg cylinders be made available to the public without a shortage”.

“In keeping with the Hon. Minister’s guidelines to provide consumer information and clarify with regard to the new Premium Hybrid 18 Litre Cylinder introduced to the market, Litro Gas Lanka hopes to implement such activities within a week, while keeping the product at the introductory price”, the company’s Chairman/CEO, Anil Koswatte, said in a statement.

Asked what “implementing such activities” meant, a Litro spokesperson declined to elaborate saying it was difficult to comment on questions raised outside the scope of the media statement.

On whether the weight of the hybrid cylinders will remain intact with a change of color merely to differentiate between the two products, she politely refused to entertain questions beyond the media statement issued by the company.

Permitting Litro Gas to market the new cylinders is unacceptable, a senior CAA official protested. “This is unprecedented — it is a fraud perpetrated on consumers”.

The CAA’s letter to Litro asking it to withdraw the new LPG cylinders still stands, he stressed. “The company has violated Section 10 of the Consumer Protection Act and is liable for prosecution”.

“This is a daylight robbery. The State Minister may have granted approval, but the CAA cannot allow consumers to be fleeced through such gimmicks”, he underscored.

When it comes to a grocery store or a supermarket, legal action is filed immediately even if a label of a product is found tampered with. The law cannot be applied selectively, he said.

Small-timers are penalized for violating consumer laws, but when it comes to big companies, they use their clout to wriggle out of the situation”, the official said.

Litro has been told to use a different color to facilitate identification. What will be position if the company decides to change the color of its 12.5kg cylinders? For example, if there are one million cylinders and if 400,000 are initially withdrawn for re-painting, the shortfall will force consumers to buy the new 18-litre ones, he continued.

Technically, there won’t be a dearth of LPG in the market. However, the public will have no option but to buy the 9.18kg cylinders instead of the 12.5kg ones, he said.

“It will be a Hobson’s choice”.

However, the State Minister said Litro Gas was allowed to sell the new cylinders at the introductory price subject to certain conditions. The company should primarily ensure that there’s no shortage of cooking gas in the market.

With the spike in global LPG prices, Litro Gas Lanka has already suffered billions of rupees in losses as the green light to push up the price of cooking gas in the local market was not forthcoming.

The government has resisted consistent demands for a price increase of Rs. 700 per 12.5kg domestic cylinder as it would reflect adversely on the soaring cost of living. However, as a concessionary measure of relief to Litro Gas, the Finance Ministry made an adjustment to the 7.5% Ports and Airport Development Levy.

Asked how the levy works out, a Litro spokesperson promised to check back with the finance division and convey the information. She called back later to say that the finance director wanted The Sunday Island to refer the gazette as it’s a government decision!

However, Litro’s Director of Corporate Affairs, Janaka Pathiratne, said that concessions on levies are insignificant when it comes to a mass scale LPG business that’s incurring Rs. 300 to 400 million in losses per day.

The only solution is to increase the price of a domestic LPG cylinder by Rs. 700, he pointed out. “That’s the way out of the financial crisis”.

The new hybrid 18-litre domestic cylinder was introduced to the market to cut losses as LPG is now sold below procurement cost, sources said.