by Suresh Perera

With staggering losses running into Rs. 3.8 billion (Rs. 3,800 million) over the past three months, Sri Lanka’s biggest importer and supplier of Liquid Petroleum Gas (LPG) is in the throes of a grave financial crisis as the government continues to dilly-dally on the demand for a substantial increase in the price of cooking gas.

“There’s no option other than to absorb the mounting losses as no price revision has been granted so far”, says Anil Koswatte, Chairman/CEO of Litro Gas Lanka.

“We are facing an uphill task in continuing operations amidst the financial difficulties”, he noted.

LPG prices zoomed in the global market over the past quarter with a ton selling at a new high of US$ 600.

“There’s a ray of hope now that international prices will reduce further”, Koswatte said, referring to the marginal dip over the past week with pricing per tonnage settling at US$ 539.

Litro Gas has sought a Rs. 700 increase per domestic cylinder in a desperate bid to at least cover procurement costs, but the government go-ahead has still not been forthcoming, a senior official said.

“The more people buy cooking gas, the more the losses we suffer as 700 rupees are lost on every cylinder purchased”, he explained.

Litro’s biggest marketing segment is the domestic household market, which translates into 83% of total sales.

Asked whether a government bailout has been sought as, with billions of rupees in accumulated losses, Litro Gas was being pushed towards a cash crunch, the Chairman said that as a company, Litro Gas cannot expect a subsidy from the Treasury.

“Anyway, we are trying to work out some relief and a meeting has been scheduled to examine the possibility of tiding over the situation”, Koswatte noted.

In terms of the law, Litro Gas, though a private company, cannot increase the price of domestic LPG cylinders without the approval of the Consumer Affairs Authority (CAA). However, industrial LPG cylinders are excluded from the price control mechanism.

There’s still no word from the government on the price revision on domestic gas cylinders that was sought about two months ago, a senior official said.

“Even if a price increase is finally granted, we won’t be able to recoup our losses”, he pointed out.

It is true that at a time the government has come under fire over the spiraling cost of living, increasing the price of cooking gas will make a bad situation worse, he admitted.

However, there should be a level playing field for companies also to remain viable to continue their uninterrupted services to the public, he reasoned.

Sri Lanka Insurance Corporation (SLIC) is the primary shareholder of Litro Gas Lanka Limited with 99.94% shareholding.

The impact of a LPG price hike will reflect across the board with low and middle income groups having to bear the brunt of it as a range of food items, from the ordinary man’s buth packet to flour-based products such as stringhoppers, roti, pittu and hoppers going up in price.

As even wayside eateries now depend on cooking gas, a price revision of food items will be inevitable, industry players said.