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Litro ‘rejected lower gas tender’ and public paid price
Consumers were forced to pay extra to purchase gas over the past two years as state-owned Litro Gas Lanka Ltd made an arbitrary decision to
Arbitrary decisions by Litro Gas Lanka Ltd. resulted in a heavy burden for the consumer. Pic by Indika Handuwala
obtain gas supplies at a higher price despite international offers available at better rates, former employees have claimed.
A complaint lodged by ex- employees of Litro Gas was handed in to the Minister of Finance Ravi Karunanayake last week.
Power and Energy Minister Champika Ranawaka said a full report was expected within a month and that the government would take measures to recover money from officials found responsible for the losses at Litro Gas and attempt to bring legal action against them.
The gas company’s former director of operations, Nishadh Deldeniya, told the Sunday Times that after Shell Gas sold its shares to the Sri Lankan government tenders had been called for to select a new gas supplier in 2013.
Litro Gas had received five bids: from Shell International Eastern Trading Company (19 March 2013), Vitol Asia Pte Ltd (15 March 2013), Petredec Services Asia Pte Ltd (21 March 2013), Oman Trading (20 March 2013) and Petronas (12 March 2013).
A three-member cabinet-appointed tender board had been nominated to look into the proposed transaction.
In May 2013, representatives of Shell International, which had been the lowest bidder, had met the then managing director of Litro Gas, P. Kudabalage, in Colombo to discuss the offer.
Mr. Kudabalage stepped down from office on Thursday.
“The representative of Shell International was asked whether he could offer a freight cost of $US120 per metric ton of liquefied petroleum gas (LPG). The representative said he could offer a better price than $US120,” said Mr. Deldeniya, who had been present at that meeting
He said that at the meeting Mr. Kudabalage had asked the Shell representative whether prices could be kept at the same level for two years. “The representative said Shell could offer a better price and maintain it for that period,” Mr. Deldeniya said.
He said thereafter several reminders from Shell International went unanswered and suddenly an Omani company had been awarded the contract without the other tender parties being informed.
Thereupon the Cost Insurance Freight premium for the transportation of LPG had been fixed at $US135 per metric ton from 1 June 2013 to 31 May 31, 2014. For the next year, from 1 June 2014 to 31 May 2015, the premium was to rise to $US140 per MT.
Mr. Deldeniya said Mr. Kudabalage’s argument had been that the premium had increased due to sea piracy in the area.
But, Mr. Deldeniya pointed out, the activities of sea pirates had decreased in the Arabian Sea during that period.
Under the agreement entered into with Oman Trading International Ltd in Dubai Sri Lanka would purchase 320,000 + 10 per cent MT of LPG.
Mr. Deldeniya said that as a result of the decision to purchase gas at a higher price the average consumer was paying higher rates for gas. He believed that a domestic gas cylinder could have been sold for at least Rs. 25 less than the current prices.
Mr. Kudabalage who stepped down claimed that all decisions had been taken by the board of directors headed by chairman Gamini Senarath.
He denied that Shell International’s offer had come in at $US120 per MT, but other members present at the meeting at which the offer was made confirmed to the Sunday Times that such an offer had indeed been made.
Finance Ministry sources said the complaint had been received by the minister and the issue was under study.
1872: The Colombo Gas and Water Company Ltd was established
1992: The Colombo Gas Company established
1995: The government-owned Colombo Gas Company was privatised and Shell Gas Lanka Ltd formed (Shell owned 51 per cent and the Sri Lankan government 49 per cent)
2010: Litro Gas Lanka Limited was formed when Shell decided to sell its 51 per cent stake in
Sri Lanka.