ISSN: 1391 - 0531
Sunday, October 08, 2006
Vol. 41 - No 19
Financial Times

LPG prices: Shell to battle consumer authorities again

By Lakwimashi Perera

With current LPG prices in Sri Lanka based on world market rates that are nearly a year old, Shell Gas is again preparing to battle the Consumer Affairs Authority (CAA) – with a price hike.

“Shell Gas is continuously engaging with the CAA to get them to realise the bigger picture behind the prices,” said Dr. Mahesha Ranasoma, Corporate Affairs Director at Shell Gas Lanka. Current local prices are in line with world LPG prices between October/November 2005.

An application to the CAA, responsible for revising gas prices, is currently being processed but the Shell spokesman said he was unsure what the outcome would be – given many times in the past when the CAA rejected price revisions.

Dr Ranasoma said there has been an increase in the price of LPG in the world market with prices peaking at $ 626 per ton in February. In May the price of a ton of LPG was $ 470. As of September, the price is $ 561 per ton. The last time Shell raised its prices was in January 2006.

The CAA has arbitrary control over the pricing of domestic gas says Ranasoma, suggesting the use of the decided formula, which is not generally adhered to, when deciding domestic gas prices. He suggests an alternative solution where all parties concerned come to a consensus about revising prices so that all stakeholders, including the investor, are taken care of.

He said the government should also allow the LPG sector to follow petroleum industry developments where the Ceylon Petroleum Corporation and the Lanka Indian Oil Company are allowed to sell at market prices.

“LPG is also a petroleum product,” says Dr Ranasoma. “If the concept is extended to LPG as well, that is another solution.”

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Copyright 2006 Wijeya Newspapers Ltd.Colombo. Sri Lanka.