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LP gas crisis: Litro looks at new tender amidst ‘mafia’ talk 

07 Nov 2021

  • End the LPG mafia; pressure to extend contracts: Litro Chair
  • Former Chair denies mafia talk; seeks independent probe 
  • Litro can secure bids for LPG supply at lower market price: Jayasinghe 
  • Extending current contract will cost taxpayers billions
By Asiri Fernando  State-owned Litro Gas Lanka Ltd. will float a new tender this month for the supply of liquefied petroleum gas (LPG) for 2022, The Sunday Morning learnt. The existing contract for LPG supply, which was entered into in 2020, ends February 2022. This comes amidst an ongoing shortage of LPG in the local market, forcing many to queue up to replenish their LPG cylinders.  The decision to float a new tender followed a controversial statement by Litro Gas Lanka Ltd. Chairman Theshara Jayasinghe, alleging that the supply of LPG to Sri Lanka was being controlled by a “mafia” which was leading to corruption and loss of taxpayer rupees.  Addressing a press conference last Friday (5) evening, Jayasinghe apologised to the public regarding the state-owned company’s inability to sustain LPG supply, and charged that it was due to the company being strong-armed into extending a two-year supply contract with its current supplier.  “There are many types of mafias that operate in this country. There is a mafia that is controlling the gas (LPG) market. They do not allow others to enter our market; only one supplier is allowed to bid. Over the last 10 years, you can see that only one supplier has been allowed to supply to the local market…these thieves don’t allow anyone else to enter the market. From 28 October to 1 November, we could not supply LPG to the local market; we had to close our plant on the 28th because we didn’t have any gas to sell. The reason was that the vessel carrying LPG from the supplier refused to unload, and threatened that they wouldn’t supply LPG if we did not extend the existing contract for another two years. The public should be made aware of this,” Jayasinghe said.  The comments from the LPG market leader in Sri Lanka came on the heels of a controversial attempt by the Government to merge the state-owned Litro Gas with Laugfs Gas (Pvt.) Ltd., the latter of which is alleged to be heavily in debt.  Jayasinghe claimed that parties with vested interests wanted Litro Gas to extend its supplier contract from 2022 to 2024. “If we extend this contract, the country will lose approximately Rs. 10 billion. I am happy that I could prevent this from happening and tell the public before this crime occurred,” he stated, adding that the refusal to extend the contract may endanger the management of Litro Gas. The Litro Chairman questioned who would benefit from kickbacks in the existing supply chain. He argued that Litro Gas could secure LPG at a rate of $ 100-200 less per metric tonne (MT), if allowed to call for new tenders. Sources close to Litro told The Sunday Morning that Sri Lanka could find bidders that charge around $ 60-70 per MT in shipping charges, compared to the $ 105 per MT as per the current agreement. “There are also suppliers who offer a MT of LPG at around $ 600, compared to the $ 800-plus price point that we are paying now. If we are allowed to go for open and transparent tenders, Litro can secure much-needed savings that can be passed onto the consumer,” a senior Litro official said, on condition of anonymity. Meanwhile, former Litro Gas Lanka Chairman and Chief Executive Officer (CEO) Anil Koswatte had written to the Secretary of the Treasury seeking an independent investigation into the allegations made by Jayasinghe, calling them “irresponsible and unsubstantiated”. In a letter dated 6 November, Koswatte had stated: “I would like to formally request you to conduct an independent inquiry into the said allegations – to ascertain the truth, taking into consideration the fact that such allegations not only tarnish my image but also that of Litro Lanka Ltd. and its brand name.”  The state enterprise imports close to 400,000 MT of LPG each year to cater to 80% of the market.  


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