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Laugfs Gas charges gas price hike illegal

18 Aug 2021

  • Claims revision contrary to SC orders in letter to CAA
  • Questions why not increased under agreed price formula
By Cassendra Doole The recent price increase made by the Consumer Affairs Authority (CAA) to Laugfs domestic LP gas cylinders is “illegal and has no reasonable basis in law”, said Laugfs Gas PLC in a letter addressed to the CAA, adding that the price increase is in contempt of the Supreme Court of Sri Lanka. Laugfs has reportedly sent this letter to the CAA, while already complying with the price set by the Authority.  Accordingly, in the letter sent by Laugfs Gas PLC Group Managing Director/GCEO P. Kudabalage to the CAA Chairman, these revisions are not in line with the express orders made by the Supreme Court in SCFR 163/ 2007, as well as the agreement dated 28 December 2007 between Laugfs Gas PLC and the CAA. “We have been informed by your letter dated 12 August 20-21 that the Consumer Affairs Authority has granted approval for increasing the maximum retail price of domestic LPG cylinders by Rs. 145 for 5 kg cylinders and by Rs. 363 for 12.5 kg cylinders. Accordingly, we are informed that the new maximum retail price of a 5 kg domestic LPG cylinder will be Rs. 743 and that of a 12.5 kg domestic LPG cylinder will be Rs. 1,856,” Kudabalage wrote in his letter, adding: “In terms of the said agreement, all increases in the maximum retail price of domestic LPG cylinders should be made on the basis of the pricing formula contained in the agreement. According to Laugfs Gas, the pricing formula states that they are legally entitled to sell a 5 kg domestic LPG cylinder at Rs. 997 and a 12.5 kg domestic LPG cylinder at Rs. 2,493. Kudabalage’s letter goes on to note that the approval granted by the CAA is illegal and has no reasonable basis in law. “This is made self-evident when considering that you have not provided any reasons or explanations as to the basis on which the said approval was granted and how the CAA came to the determination that the aforesaid increases of Rs. 145  and Rs. 363 were lawful and valid,” he noted. “The reasons for affecting such arbitrary price increases being unknown, it is prima facie apparent that it must have been made on the basis of irrelevant considerations which are strictly outside the lawful purview and jurisdiction of the CAA, thereby violating the express provisions of Section 18 of the Consumer Affairs Authority Act No. 9 of 2003, the agreement and act in open defiance of the Supreme Court order and in contempt of the Honorable Supreme Court of Sri Lanka.” Laugfs Gas expressed their concerns and stated that as a law-abiding public voted company, they will stick to the pricing provided by the CAA in protest. The document went on to state: “Therefore we hereby reiterate and put you on notice that the perforated price increase of Rs. 143 and Rs. 363, respectively is illegal, unlawful, and has no effect of validity in law. We hereby further rate and put you on notice that our company has the right and is lawfully entitled to sell a 5 kg domestic LPG cylinder at Rs. 997 and a 12.5 kg domestic LPG cylinder at Rs. 2,493 in terms of the agreement and the Supreme Court order. In these circumstances, as a law-abiding public voted company, we will adhere to the proportionate price increase of Rs. 145 and Rs. 363 on protest and reserving our rights in addition to the information contained in this letter. We are also willing to provide any further information as may be required by the CAA to make determinations in line with the agreement and the Supreme Court order.” Previously, The Sunday Morning reported that Laugfs Gas has decided to stop all imports due to difficulties faced in opening Letters of Credit (LCs) and the accumulation of losses. Speaking to The Morning, Laugfs Holdings Ltd. Founder and Executive Chairman W.K.H. Wegapitiya stated that Laugfs Gas has been making a loss of around Rs. 800 to Rs. 900 on the sale of each gas cylinder. When queried about the response of the authorities in light of this, he stated that the CAA has noted that they will not allow for any price increase to take place with regard to gas cylinders.


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