Sri Lanka will not allow any sudden hike in domestic LPG gas prices right away-even if the global crude rates continue to gallop.

“Your support to the government and Sri Lankans right now is very important. Our priority is to safeguard the consumers” stressed the Minister of Industry and Commerce Rishad Bathiudeen on 18 October at the Ministry of Industry and Commerce Colombo 3. Minister Bathiudeen, joined by his officials from the Consumer Affairs Authority (CAA), Secretary to Ministry of Industry and Commerce KDN Ranjith Ashoka, and Minister of Public Enterprise & Kandy City Development Lakshman Kiriella was addressing the representatives of Sri Lanka’s largest LPG importer, cylinder distributor and supplier Litro Gas Lanka (LGL) on 18 October.

The Litro representatives were making a strong call on Minister Bathiudeen and CAA to upwardly revise the ‘transport cost component’ within the LPG pricing formula already agreed by with CAA.

Litro representatives said that the diesel costs have continuously escalated since 2007 making their LPG transport costs too to escalate thereby eroding their margins. The costs have come to a level where they cannot profitably operate anymore and industry is facing an imminent shutdown if it continues in this way. The representatives then handed over their proposal to hike LPG rates to Minister Bathiudeen calling to increase the ‘transport cost component’ which is a component of CAA agreed composite LPG gas price formula.

CAA officials reiterated that Sri Lankan domestic LPG prices in the market are now determined by a pricing formula agreed between the two LPG players (LGL and Laugfs) and the CAA, and sudden ad-hoc changes are adverse to the consumers and households that are heavily dependent on the cylinders.

“We commend you, the LPG gas suppliers for your continued service to our consumers. There have been changes in global market LPG rates as well as local transport costs due to international crude oil price hikes” said Minister Bathiudeen, and added: “The crude price hike is hurting our economy in many ways and LPG industry is no different. At present global crude oil prices are at a four year high and our consumers are facing the impact directly. Very recently in CAA’s September 27 determination, we already allowed District-to-District LPG prices with adjustments for transport, which is the pricing framework now in effect. Revising this already revised LPG market prices again at this moment is very damaging to our consumers. Always our priority is to safeguard them. Your support to the government as the largest LPG player, by not raising market prices at this moment therefore is very important. I shall still forward your proposals to Head of the Cost of Living Committee Minister Malik Samarawickreme as well as to the Finance Ministry immediately and await for their inputs.”

Litro representatives nodded in agreement with Minister Bathiudeen’s assessment that any sudden LPG price revisions are harmful to Lankan consumers. “We shall assist the government’s effort to safeguard our consumers while requesting to consider our proposals as well” they voiced.

During the October 18 meeting, Minister Bathiudeen also instructed CAA officials to evaluate Litro proposals and report back to him. Earlier, on 27 September 2018, CAA issued a District-to-District determination on Maximum Retail Prices for LPG cylinders, which is now in effect island-wide.

Thus for Colombo District, a 12.5 Kg cylinder at Rs 1733, 2.3kg cylinder at Rs 319, and 5 Kg cylinder at Rs 693. For other Districts, CAA even allowed sellers to add a fixed transport cost, which is not applicable to Colombo District. Thus, for example, in Jaffna district the 12.5 Kg cylinder, with transport cost adjustments, could be sold at MRP Rs 1853, 2.3kg cylinder at MRP Rs 335 and 5 Kg cylinder at MRP Rs 753. Similarly, using the same ratio, prices for other Districts are now set as: Gampaha 12.5 Kg at Rs 1744, 2.3 Kg at Rs 335, and 5Kg at Rs 698, Kalutara  12.5kg at 1752, 2.3 kg at 337, and 5 kg at 703, Puttalam 12.5kg  at 1768, 2.3 kg at 338, 5kg 708, Kegalle 12.5kg at 1772, 3.2 kg at 340, 5kg at 713, Kurunegala  12.5kg at 1771, 2.3 kg at 340, 5kg at 713, Galle  12.5 kg at 1775, 2.3 kg at 341, 5 kg at 713, Ratnapura 12.5 kg at 1775, 2.3 kg at 339, 5kg at 713, Kandy 12.5 kg at 1785, 2.3 kg at 341, 5 kg at 718, Matara 12.5kg at 1788, 2.3 kg at 343, 5kg at 718, Matale 12.5 kg at 1789, 2.3 kg 342, 5kg at 723, Trincomalee  12.5 kg at 1811, 2.3 kg at 346, 5 kg at 733, Anuradhapura  12.5 kg at 1809, 2.3 kg at 345, 5 kg at 733, Polonnaruwa 12.5 kg at 1809, 2.3 kg at 344, 5kg at 733, Vavuniya  12.5 kg at 1810, 2.3 kg 340, 5 kg at 733, Mannar 12.5 kg at 1828, 2.3 kg 340, 5 kg at 743, Hambanthota 12.5 kg at 1811, 2.3 kg at 346, 5kg at 733, Monaragala 12.5 kg at 1842, 2.3kg at 347, 5kg at 748, Badulla 12.5 kg at 1829, 2.3 kg at 346, 5kg at 743, Ampara 12.5 kg at 1846, 2.3kg at 348, 5 kg at 748.00, Nuwara Eliya  12.5 kg at 1823, 2.3 kg at 344, 5 kg at 738, Batticaloa 12.5 kg at 1844, 2.3 kg at 348, 5kg at 748, Kilinochchi 12.5 kg 1837, 2.3 kg 342, 5kg at 778, and Mullaitivu 12.5 kg at 1836, 2.3 kg at 343 and 5 kg at 778.

CAA can raid any seller who violates these LPG MRPs. According to Section 60 of CAA Act No 9 of 2009, conviction results in fines and even imprisonment. Section 60 -Sub section 4 (i.e S 60.4) defines the penalties. S.60.4 (a) pertains to individuals, slaps Rs 5000-50000 fine and/or up to one year’s imprisonment for first time offenders and for subsequent violations, Rs 10000 to 100,000 fine and/or up to two years’ imprisonment. S60.4 (b) pertains to violations by corporations, slaps Rs 50000-Rs one million fine for first timers and for subsequent violators, Rs 100000 to Rs two million fine.

Earlier on October 3, Reuters reported that Brent oil futures “are at a four year high at US$ 86.74 a barrel.”

Minister of Industry and Commerce Rishad Bathiudeen (far left) joined by Minister of Public Enterprise & Kandy City Development Lakshman Kiriella (second from left) meets representatives of domestic LPG industry (at right) on 18 October.