Controversial tender clause forces Litro bidders toward rival terminal
The latest international tender floated by Litro Gas Lanka Ltd, Sri Lanka’s state-owned LPG distributor, to procure 380,000 metric tonnes (±20%) of liquefied petroleum gas (LPG) for 2026 has been overshadowed by a sudden and unprecedented amendment. The tender, published on August 27 closed in mid-September 2025.
But just before the deadline, Litro inserted a new clause recently into its conflict of interest section, sparking industry alarm and political protest.
The amendment, under Section 11, Clause 4.2 (new Clause VIII), reads: “Bidders shall be permitted to lease the competitor’s terminal facility in Hambantota. However, Litro will bear no responsibility for the product or any related logistics arrangements until the product is delivered for the Litro CBM terminal.”
At first glance, the clause appears to provide flexibility. But critics argue it effectively nudges bidders toward using infrastructure owned by LAUGFS Gas, Litro’s direct competitor. This move revives long-running debates about the Hambantota terminal’s role in national energy security and raises concerns about procurement transparency.
Litro currently operates a relatively modest 8,000 MT terminal at Kerawalapitiya, supported by smaller facilities at Mabima. To meet Sri Lanka’s domestic demand around 32,000 MT per month the state firm must bring in frequent shipments.
In contrast, LAUGFS Terminals Ltd controls a state-of-the-art LPG terminal at Hambantota with a 30,000 MT capacity, alongside a 3,000 MT facility at Mabima, giving it a distinct logistical edge in storage and transshipment.
This disparity is at the core of the controversy. By formally permitting bidders to rely on Hambantota, Litro risks embedding dependence on its rival’s infrastructure. “It is like asking a state company’s suppliers to pay rent to its competitor,” one energy analyst said. This is not the first time Hambantota’s terminal has been a flashpoint. In June 2021, the government floated a proposal for a public-private partnership allowing Litro and LAUGFS to jointly operate the Hambantota terminal for LPG storage, Business Times reported at that time.
The idea, championed by LAUGFS Chairman W.K.H. Wegapitiya, aimed to reduce costs by about US$ 70 per metric tonne and stabilise retail prices.
A special committee was even appointed to study the feasibility. However, the proposal stalled amid political uncertainty and fears of ceding strategic control of national energy supply.
Procurement specialists note that any substantive clause change should be formally issued as an addendum and shared equally with all bidders. Failure to comply with due process risks the tender being challenged legally either before the Procurement Appeal Board or even in the courts.
For foreign suppliers, the amendment introduces operational risks: utilisation of a private competitor’s terminal can increase costs, reduce flexibility, and complicate logistics. For Sri Lankan consumers, reduced bidders can mean higher prices and reduced security of supply.
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