With soaring global LPG prices

By Suresh Perera

The appointment of a new Chairman to Litro Gas Lanka Limited has raised questions over whether “changing pillows” could help the government-owned enterprise that dominates Sri Lanka’s Liquid Petroleum Gas (LPG) industry to recoup Rs. 3 billion (Rs. 3,000 million) in accumulated losses over the past few months

“We are grappling with around Rs. 40 million in losses per day”, a senior Litro Gas official complained.

It has boiled down to a situation, where the company has to sell LPG below the procurement price by throwing in an involuntary ‘subsidy’ Rs. 700 for every 12.5kg cylinder of cooking gas sold in the market, he said.

With earnings and savings fast running out, it’s difficult to imagine how Litro Gas will be able to continue operations without a price revision, he remarked.

Amidst the crisis faced by Sri Lanka’s biggest importer and supplier of LPG, the government named Theshara Jayasinghe, former Chairman of National Youth Services Council as the new head of Litro Gas Lanka Limited.

He replaced Anil Koswatte, a sales and marketing professional and a leading entrepreneur, who founded ‘Lakarcade’, Asia’s biggest novelty gift and souvenir chain.

It was an unceremonious exit for Koswatte, who officials acknowledged, “did his utmost under difficult circumstances as the spike in international LPG prices was beyond him”.

Koswatte came under flak at one time for purportedly drawing a monthly remuneration of Rs. 3 million – Rs. 2 million from Litro Gas Lanka and Rs. 1 million from Litro Terminals Lanka Limited.

Declining to either confirm or deny that he he was paid a seven-figure salary, he told The Sunday Island at the time that his remuneration was a matter for the shareholders of the company to determine.

If Koswatte drew Rs. 3 million as his monthly salary, then his successor will also be entitled to the same privilege unless decided otherwise, officials pointed out.

Litro Gas Lanka is wholly owned by the Sri Lanka Insurance Corporation.

The Consumer Affairs Authority (CAA) has so far declined to give the nod to an appeal by Litro Gas for a Rs. 700 price increase per 12.5kg domestic LPG cylinder, they said.

At a time global LPG prices have soared, appointing a new Chairman to Litro Gas cannot be expected to make a revolutionary change, industry players pointed out.

“Whatever name there is to a face delegated to run the business, the reality is that the surge in international gas prices, coupled with the appreciation of the US dollar, has made procurement increasingly costly”, they said.

The bitter truth is that local LPG prices will have to be adjusted accordingly to sustain imports and keep the company (importer) afloat, they continued.

Asked about procurement prices, Janaka Pathirathna, Director, Sales, Marketing and Corporate Affairs of Litro Gas Lanka, said that global pricing has shot up to US$ 600 per metric tonne.

He said that the price is expected to remain high till December this year as the demand for LPG has picked up again with the world’s industrial sector resuming operations following the improvement in the Covid-19 pandemic situation.

He said that Sri Lanka procures LPG from a government-owned company in Oman at prevailing global market prices.

Meanwhile, the CAA’s Executive Director, Thushan Gunawardena said there is still no decision on revising the price of gas. Both Litro and Laugfs Gas have sought a Rs. 700 increase per 12.5kg domestic cylinder.

On the launch of the controversial 18-litre cylinders, he said the CAA Council is now examining the matter for follow-up action after a report is submitted.

He said the regulatory body has also come across issues relating to the use of gelatine in certain yoghurts, creamers instead of fresh milk in milk powder and a high alkaline level in bath soaps.