Laugfs grapples with LPG imports amidst dollar constraint
View(s):Liquid Petroleum Gas supply of Laugfs Gas Plc has come to a standstill countrywide as the company is facing difficulties in opening Letters of Credit at relevant banks due to the current dollar shortage, Laugfs Chairman W.K.H. Wegapitiya said.
Mr. Wegapitiya told the Business Times that the company has not taken any decision to halt LPG imports but the bank refusal to open LCs and provide credit facilities for imports has become a major problem.
The main obstacle was the dollar scarcity in banks and the market following the high price of Rs. 203 to the US dollar while it was at Rs.240 in the black market.
The other reason was the government’s refusal relating to the request made by the company to increase the LPG price in accordance with world prices and rupee depreciation, he added.
Laugfs Gas is running at a loss at present and it has no alternative other than to increase prices, he said adding that they will discuss this matter with the President and the Prime Minister soon to find some redress.
The import bill per month of Laugfs was US$7-10 million while the import cost of Litro Gas was $ 20-23 million totaling $30 million as import costs for both companies. The annual cost to import around 440,000 MT was $260-360 million, official Finance Ministry provisional data revealed.
Mr. Wegapitiya noted that Sri Lanka’s two LP gas suppliers have been lobbying the Consumer Affairs Authority for a price revision continuously during the past eight months and several suggestions have been made to the government to settle the financial constraints of Laugfs and Litro.
One such suggestion was the single platform for procurement, transportation and storage of gas for the two companies at Laugfs’ Hambantota terminal; he said adding that no solution was given by the government as yet.
Meanwhile state-run Litro Gas announced that it had sufficient LPG stocks to meet the demand and that the company stands ready fill gas in any types of cylinders in the market.
Chairman of Litro Gas, Theshara Jayasinghe said in a media release that if Laugfs Gas, which covers 30 percent of consumers in the country, is suspending imports, Litro Gas is ready to supply gas to meet the demand of their consumers as well.
In response, Mr. Wegappitiya noted that such unethical practices are illegal and a scarcity of LPG will not arise as Laugfs has sufficient stocks to meet the current consumer demand.