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LP gas crisis may aggravate from November onwards: Lobbyists

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Litro Gas Lanka is currently facing a financial crisis and if the Treasury does not grant monetary assistance to purchase LP gas, Litro Gas Lanka will not be able to import LP gas from November onwards, J.A.S Terence Appuhami, Secretary, Litro Surakeeme National Unity said yesterday representing the members of the group.

A summarized reproduction of the press release is as follows.

“Global price of LP gas increased to an unprecedented amount of 800 USD per tonne on October 1, 2021. When converted directly to a 12.5kg Cylinder, the cost of product adds up to Rs. 2,021. However, at present, the price of a 12.5kg Litro gas cylinder is set at Rs 1,493, and once the shipping, insurance and other necessary costs are taken into account, the additional cost of manufacturing a 12.5kg LP gas cylinder accounts to Rs 700.”

“Accordingly, the cost of manufacturing a 12.5kg LP gas comes up to Rs 2,800. As a result, Litro Gas Lanka will be compelled to increase the price of a domestic gas cylinder to Rs 2,800 in order to cover the cost of purchase, shipping, insurance and other necessary expenses.”

“The decision to not increase gas prices parallel to cost fluctuations during the past 9 months resulted in a loss of Rs 10.5 bn for Litro Gas Lanka. As a result, the Company is currently facing a financial crisis, which means that if the Treasury does not grant monetary assistance to purchase LP gas, Litro Gas Lanka will not be able to import LP gas from November onwards. The monthly cost of purchasing LP gas for the entire country is 30 mn USD. Can the Government afford such a hefty expense? If the current status quo remains unaddressed, Sri Lanka will face a LP gas crisis in the coming months.”

“Litro Gas Lanka has already reached out to all relevant authorities, informing each entity at length about the nature of the potential crisis. However, none of the relevant authorities have taken action to resolve the issue, leading the Company to believe that the authorities are either willing to allow Litro Gas Lanka to become bankrupt or plans on sabotaging the Government.”

“If the authorities fail to address the issue in time, the situation would escalate leading to a scarcity of LP gas that will negatively impact the public, loss of trust in the Government, and the bankruptcy of a previously profitable state-owned enterprise. Notwithstanding in action that would lead to these crises, the burden of unnecessarily high LP gas prices will inevitably fall onto the public.”

“Given the status quo, it is imperative to increase the price of a 12.5kg gas cylinder by Rs 1,200. Failing to do so will lead to the Treasury having to bear the additional cost, a burden that it is ill-prepared to handle given the state of the economy.”

“Moreover, establishing a separate Company named, Siyolit (Pvt) Ltd Lanka to import LP gas to Sri Lanka is not a feasible solution to the complicated problem of gas price anomalies. Attempts to establish the aforementioned Company is merely a covert stratagem to allow a handful of individuals and groups to earn an unscrupulous income.”

“While Litro Gas Lanka partnered Siyolit (Pvt) Ltd Lanka at first, Litro later withdrew from the partnership and directorships of Siyolit after informing Secretary to President of Sri Lanka Dr P B Jayasundara.”

“Litro Gas Lanka has been an efficient, profit generating business worth Rs 50 Bn that enjoys 80 percent of the market share.”

“We hope that the President and relevant authorities will intervene to resolve the current crisis,” the lobbyists said.



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National Trade Facilitation Committee Secretariat to be established

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The NTFC review meeting in progress

In an effort to accelerate trade facilitation commitments and bolster the business landscape in Sri Lanka, a high-level review of the National Trade Facilitation Committee (NTFC) was conducted at the Presidential Secretariat on Wednesday (7).

The review focused on assessing the progress of trade facilitation commitments and scrutinizing the performance of the NTFC Secretariat. The private sector also voiced their views on expediting actions to ensure the completion of measures ahead of the projected timeline of 2025-2030.

In order to streamline compliance and optimize performance, several directives were issued during the meeting. Firstly, it was decided to establish the NTFC Secretariat under the supervision of the Ministry of Finance. Secondly, immediate measures to be taken to address the staffing requirements of the Secretariat and lastly, the budget allocated for the NTFC Secretariat in 2023, currently under the Department of Customs, was to be transferred to the Ministry of Finance to prioritize pending actions such as the development of the NTFC website and progress reporting system.

During the meeting, deliberations took place concerning the proposed National Single Window, a system aimed at simplifying and expediting trade processes. The participants agreed to expedite the submission of the proposal in a sequential manner to ensure its swift implementation.

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PM discusses ADB future projects in Sri Lanka with ADB DG and new Country Director

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Asian Development Bank’s (ADB) Director General for South Asia Kenichi Yokoyama and newly appointed Country Director Takafumi Kadono held discussions with Prime Minister Dinesh Gunawardena on Thursday (June 8) at the Temple Trees in Colombo.

The Prime Minister, while welcoming the new Director General thanked the outgoing DG, Chen Chen for the support extended to Sri Lanka during the height of Covid pandemic and the economic crisis. He thanked the ADB for extending short term, immediate contingency support which has helped Sri Lankan economy to recover from the unprecedented crisis within a short period of time. ADB loan funds amounting to USD 380 mn were targeted for enhancing fiscal space and efficient public financial management system as well as strengthening the SME sector with access to finance. Further USD 250 mn was obtained as budgetary support to develop Capital Market.

The Prime Minister made a special mention about ADB’s US$ 333 million emergency assistance to support import of essential items such as fertilizer, medicines and chemicals for water treatment, working capital support to SMEs, and cash transfer to most poor and vulnerable to mitigate the impact of economic crisis.

ADB Director General for South Asia Keinichi Yokohoma, praised the recovery made by Sri Lankan economy and briefed the Prime Minister about the ADB’s mid-term and long-term projects for economic progress and infrastructure development.

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ADB provides Sri Lanka access to concessional financing to facilitate sustained and inclusive recovery

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Kenichi Yokoyama, Director General of ADB's South Asia Department

Low interest -rate financing broadens country’s options to bridge urgent development financing needs

ADB support now comes in concessional and market-based financing, technical assistance, policy advice, and knowledge solutions

The Asian Development Bank (ADB) has approved the eligibility of Sri Lanka to access concessional financing. The availability of concessional assistance, offered at low interest rates, broadens Sri Lanka’s options to bridge its urgent development financing needs to restore economic stability and deliver essential services, particularly to the poor and vulnerable.

Eligibility for concessional resources among the developing member countries of ADB is based on gross national income per capita and creditworthiness. ADB’s decision was considered based on a request from the Government of Sri Lanka in view of the severe and unprecedented economic crisis that has reversed hard-won development gains.

“ADB is committed to further enhancing its support for the people of Sri Lanka as the country responds to this deep crisis that has severely undermined their livelihoods and well-being,” said ADB Director General for South Asia Kenichi Yokoyama. “The availability of concessional assistance will help Sri Lanka to lay the foundation for economic recovery and sustained, inclusive growth.”

Sri Lanka is now eligible for ADB support including concessional and market-based financing, technical assistance, policy advice, and knowledge solutions that together comprise a comprehensive suite of options to address the crisis. Access to concessional financing will also ease debt servicing pressures through more favorable lending terms.

ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 68 members—49 from the region.

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