• Local suppliers yet to find Indian suppliers to purchase through Indian LOC 
• $ 160 m allocated through Indian LOC and $ 90 m from WB for LP gas purchases
• Litro claims Rs. 2.6 b loss, urges price hike
• Says Litro may need 1-2 months to address supply shortage

By Maheesha Mudugamuwa  A quick solution to the severe Liquefied Petroleum Gas (LPG) shortage around the country remains out of sight, as local LPG importers struggle to find suppliers from India to utilise the funds allocated through the Indian Line of Credit (LOC). It is learnt that funds totalling $ 160 million have already been allocated through the Indian LOC, but the funds cannot be utilised until an Indian supplier can be finalised for both State and private gas importers of the country. The State-owned LPG importer Litro Gas Lanka Ltd. and the private gas importer LAUGFS Gas PLC have been promised funds from the Indian LOC based on their local market shares but the two importers need to find suppliers from India to utilise these funds and bring down the necessary stocks, The Sunday Morning learns. In the meantime, a total of yet another $ 90 million is expected from the World Bank (WB) for LPG importation. But no final decision has yet been made regarding the funds, it is learnt. State’s stand Speaking to The Sunday Morning, Trade Minister Shehan Semasinghe said: “From the Indian Line of Credit, there is an allocation of $ 160 million for the importation of gas. But the issue is both Laughfs and Litro have to find suppliers. Also from the WB, we are getting $ 90 million within the $ 400 million immediate assistance that they are giving. What we thought was to divide these amounts proportionately among LAUGFS and Litro according to their market share.” However, he stressed that LPG purchase orders had not yet been placed as it was still in the initial stages and yet to be finalised. Against such a backdrop, the Cabinet of Ministers has given the approval to purchase LPG from Thailand-based Siam Gas Company for a period of one year. This is following the termination of the existing agreement with the Omani Company. It is stated that in comparison to the current rates of the Omani supplier, the prices offered by Siam Gas Company are less than $ 9 per MT. The said company will accordingly supply 70% of Sri Lanka’s LPG requirements per year. Commenting on the Thai supplier, Minister Semasinghe stressed that the Cabinet had approved on Monday to procure 70% of gas from Thailand for the long-term. “For that, the procurement has to be done,” he stressed. Also, he noted that for purchasing LPG from Thai companies, the Government should open Letters of Credit (LCs). “We can’t utilise funds from the Indian LOC to bring down gas from Thailand,” he said. Furthermore, when asked about the funds, Semasinghe said, the existing funds would be enough to supply LPG for three months. During the last few months, the gas queues have stretched further, reaching the length of one kilometre in some parts of the country, with at least three deaths reported whilst waiting in line. Also, many people in rural areas have shifted to traditional cooking methods while some people living in urban areas have started to use kerosene or electric cookers.  Litro’s struggle Litro stated that it had incurred a loss of over Rs. 2,600 million as the price of a domestic gas cylinder had remained unchanged despite the fact that it should be raised by around 60% due to the rupee depreciation and high fuel prices as well as the gas price increase in the world market. As the leader in the LPG sector, Litro Gas Lanka has a market share of over 76%, operating in an energy industry full of opportunities. Litro Gas Lanka provides LPG to over four million households in addition to supplying multiple needs based commercial and industrial sectors. The Litro Gas Lanka network consists of 42 distributors, approximately 14,000 point-of-sale locations, and 1,500 home delivery hubs that meet LPG needs countrywide. However, it is expected that the existing shortages will be addressed when the sole private importer resumes operations. LAUGFS is said to have more than 50,000 customers, 30 distributors, and 5,000 dealers. Despite Litro’s massive market share, as stressed by industry experts, Litro alone cannot meet the country’s domestic gas demand and therefore, unless the private gas importer restores imports, the shortage is expected to continue. The country experienced a severe LPG shortage late last year too when LAUGFS stopped operations claiming it was incurring losses due to the import and selling price difference and insisted on a price revision. After a few weeks of struggle, the Government decided to revise the prices of LAUGFS Gas. Priority to urban areas In such a backdrop, Litro stated that in the future, priority would be given to the urban community in the gas distribution process since 25% of gas consumers lived in urban cities. In 2020, the urban population in Sri Lanka stood at approximately 3.94 million people. This constituted an increase from approximately 3.69 million people in Sri Lanka living in urban areas in 2011. Recently, Litro has hiked gas prices by a record amount, with the price of a 12.5 kg cylinder being increased by Rs. 2,185 to Rs. 4,860. The price of a 5 kg cylinder went up by Rs. 874 to Rs. 1,945 while a 2.3 kg cylinder went up by Rs. 404 to Rs. 910. Shipments expected When contacted by The Sunday Morning, Litro Gas Lanka Chairman Eng. Vijitha Herath said it would take around one-and-a-half months to sort out the remaining shortages. “Litro can’t supply the entire market alone. Until the private supplier resumes operations, the problem cannot be solved,” he said. He said the company was expecting two shipments of 3,500 MT each. “We need at least one such shipment each week to ease out the remaining shortages,” he added. Commenting on the existing stocks, the Chairman noted that Litro had a small stock available until the expected shipments arrived. When asked why the Indian LOC had not been not utilised thus far, LAUGFS Holdings Ltd. Chairman W.K.H Wegapitiya told The Sunday Morning that they had requested the Indian High Commissioner in Colombo to facilitate the removal of some challenges faced when importing LPG from India. LPG prices for domestic use have increased significantly in the Indian local market in the recent past.   According to Wegapitiya, India has strict controls on exporting LPG, with exports being taxed. He said that LAUGFS Gas has sought a one-time exception to enable the utilisation of the Indian LOC that is available. Wegapitiya added that LAUGFS had adequate storage facilities at Hambantota to stockpile LPG needed to supply its customer base for approximately a month, if LPG could be imported.