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Litro LPG ordered at higher price yet to arrive

08 Jul 2022

  • Chose $ 129 per MT proposal over $ 112 per MT
  • COPE Chair instructs Auditor General to probe
By Safra Fazal At the Committee on Public Enterprises (COPE) meeting with Litro Gas Lanka Ltd. held on Tuesday (5), it was revealed that Litro had obtained the approval of the Cabinet of Ministers for the procurement of liquefied petroleum gas (LPG) for the month of June at $ 129 per metric tonne (MT), overlooking an alternative proposal of $ 112 per MT. Speaking at the meeting, Litro Chairman Muditha Peiris stated that the suppliers that had quoted the lowest rates and were hence selected by Litro were two companies by the name of Siam Gas Trading and Oman Gas Company, that quoted $ 112 and $ 129, respectively. The procurement of gas was to be paid through a loan of $ 70 million offered by the World Bank in addition to Government funds. Peiris, who earlier stated that the Siam Gas Company was rejected on the basis that they requested payment through a standby letter of credit (SBLC) – which the country was unable to accommodate after having defaulted on all its foreign debt back in April – retracted his statement when Samagi Jana Balawegaya (SJB) Opposition MP Dr. Harsha de Silva, having referred to the correspondence between the supplier and Litro, revealed to the committee that the supplier had also agreed to alternative modes of payment other than the SBLC. Peiris then stated that the Siam Gas Company was rejected on grounds that they could only provide 6,600 MT as opposed to Litro’s requirement of 15,000 MT. He added that the Oman Gas Company was hence chosen despite their higher rate and that this company had stated that they would provide 100,000 MT of LPG to the island. However, no gas shipment has arrived in the country in June or this month so far. COPE Chairman Prof. Charitha Herath, responding to Peiris, said: “You represent the State in ensuring that you secure LPG for the public. What your company (Litro) did was that you asked the relevant supplier for a quantity that was clearly unattainable, and then you rejected it. Ultimately, you purchased gas at a price of $ 129 when you could have purchased it at $ 112. If you calculate the losses, for how many more months could we have purchased LPG?” Meanwhile, the officials of Litro – who stated that they were uncertain as to which supplier they should choose, and hence had put forward a Cabinet paper providing the two options to the Cabinet which then chose the company that had quoted a higher rate – were also accused of misleading the Cabinet by Herath. “You have not asked the Cabinet to choose from the two suppliers. You have merely provided the details and have asked for approval to procure LPG from the Oman Gas Company,” Herath charged. Former Litro Chairman Eng. Vijitha Herath, who was also at the meeting, said that he resigned because he could not approve the deal with the Omani company according to his conscience. Meanwhile, SJB MP S.M. Marikkar noted: “You (Litro) say that you opted for a higher price claiming that you have to deliver gas to the people soon, yet you have not received gas for the months of June or July from this company. You could have brought down at least 6,600 MT for a much lower price, yet you did not.” Speaking at a media briefing on Wednesday (6), Marikkar also said: “$ 3.3 million is the loss incurred due to this. This is similar to the Central Bank of Sri Lanka (CBSL) Treasury (T) Bonds scam which occurred when Prime Minister Ranil Wickremesinghe was the Prime Minister earlier. This time, through the Cabinet paper that he has put forward as the Finance Minister, this has happened. Through the investigations of the COPE, we observe that Litro has misled the Premier, while the latter has misled the Cabinet. In the guise of resolving this crisis, no official or politician should allow fraudulent activities to take place.” Marikkar further said that despite the losses incurred, COPE has not in any way asked Litro to halt the shipments, as LPG is of absolute necessity for the people. Meanwhile, COPE announced in a press release yesterday that (Prof) Charitha Herath has recommended that an investigation be conducted through the Auditor General's Department on the cancellation of the Term Tender, which had been approved by the Cabinet to buy gas from Siam Gas at $ 96 per MT and opting to buy 100,000 MT of gas at a cost of $ 129 per MT from the Oman company. It was disclosed that since the Term tender for the purchase of gas ended last February, tenders were invited for 2,80,000 MT of gas and three gas suppliers have submitted bids accordingly. Siam gas Company has submitted the lowest price as $ 96 per MT and accordingly the Cabinet has approved to award the tender. The COPE Chair has instructed the Auditor General's Department to conduct a formal investigation and report whether the loan amount of $ 70 million from the World Bank was effectively used, and added that although the need for gas is a necessary emergency, buying from the Omani company at a higher price instead of the lowest bidder, Siam, may set a bad precedent in the future.


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