Litro Gas Lanka yesterday announced that it was looking at the possibility of bulk buying as opposed to ad-hoc purchasing to manage the domestic demand.
A spokesperson for Litro Gas Lanka said that the government had given the green light for pursuing the proposed plan to mitigate the current crisis: “Litro Gas Lanka caters to the demand from BOI, Export Processing Zones and other export-oriented industries, and sectors that are critical to the economy and bring in much-needed forex. Litro Gas Lanka single-handedly managed to cover the country’s critical industries – including the HORECA category – undertaking the challenge of catering to its own demographic as well as the market segment dependent on its competitor, the only other LPG supplier, for the duration of 3-4 months it was unable to actively meet the demand.”
Detailing the negotiation process for the contingency order, he said that SIAM Gas of Singapore offered the lowest rate of USD 96 as the shipping cost for a Metric tonne of LPG for the 2022/2023 tender but failed to release the consignment until a standby Letter of Credit (SBLC) to the value of USD 30mn was furnished. Further, SIAM Gas had also informed that the required quantity of 15,000 MT couldn’t be provided but 6,600 MT could be arranged instead, 10 days from the date of LOC. It was also informed this consignment would be provided at USD 112 instead of formerly quoted USD 96.
As such, Litro Gas opted for the second lowest bid of a minimum quantity of 100,000 MT at USD 129 from Omani Trading (OQ Trading), based on the decision taken at the Cabinet meeting held on June 8 – taking into account the feasibility and time considerations. The USD 17 difference between the two aforementioned bidders translates to less than Rs. 80 per cylinder, which is not a significant burden proportional to the inconvenience faced by the public due to lack of LPG in the market.
Litro Gas Lanka wished to clarify that SIAM Gas was left out from this contingent purchase not due to an issue involving commissions, as falsely claimed by certain media reports, but rather due to the stipulations and demands put forward by the supplier at this critical juncture. Logistical limitations, such as not having adequate vessels for delivery, was also a reason for ruling out SIAM Gas as a supplier for the contingency shipment, as well as the long term. The total requirement would have needed four vessels, over a period of six weeks, which SIAM Gas could not confirm. Even the vessel allocated for the Spot (contingency) was over 26 years old. These factors, too, contributed to Litro Gas looking for more reliable, dependable suppliers for the short and long terms.
The initial approval to secure LPG from SIAM Gas was granted by the Cabinet, two months ago, during the tenure of the previous Chairman, but did not materialize and it was against this backdrop that the tender was awarded to the next best alternative, OQ Trading, to expedite the process.
During the period Nov 2019 to Dec 2022 it has cost Litro Gas Lanka a staggering Rs.11.1 billion to maintain the price of an LPG cylinder at a constant rate so that LPG was affordable to the average household, which coincided with COVID-19 lockdowns.
Litro Gas Lanka is one of the most profitable SOEs in Sri Lanka, employing a cadre of only 225 permanent staff which is a testament to its efficiency and productivity. The enterprise made available an unprecedented dividend of Rs. 13 bn during the last decade to the National Treasury which is generally used for nation-building activities.
Furthermore, Litro Gas Lanka fulfilled its obligations as a socially responsible corporate by paying Rs. 34.5bn as taxes during the past decade.
As the national provider of LPG, Litro Gas Lanka requests cooperation of all stakeholders to swiftly resolve the present crisis and restore normalcy.
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