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CAA Executive Director Thushan Gunawardena[/caption]
A lawsuit is expected to be filed by the Consumer Affairs Authority (CAA) against Laugfs Gas for releasing 18-litre Liquefied Petroleum (LP) gas cylinders to the market without obtaining prior approval from the CAA, The Morning Business learns.
Speaking to us, CAA Executive Director Thushan Gunawardena said that the CAA has already filed a case against Litro Gas Lanka Ltd. for doing the same, and will pursue a similar course of action against Laugfs Gas PLC pertaining to their 18 L cylinder product.
“The permission has been given to neither Laugfs nor Litro; they have released that (18L gas product) on their discretion,” stated the CAA Executive Director, noting that the CAA’s intervention is necessary for the protection of consumers.
Cabinet approved the restructuring of the LP gas industry of Sri Lanka on Monday (21), while maintaining the price of a 12.5 kg domestic gas cylinder at Rs. 1,493, according to the recommendations presented by the Ministerial Sub-Committee headed by the Ministry of Trade.
[caption id="attachment_145363" align="alignright" width="197"]
Laugfs Chairman W.K.H. Wegapitiya[/caption]
However, speaking to The Morning, Laugfs Chairman W.K.H. Wegapitiya stated that in order to release a product to the market, there is no legal requirement to obtain CAA approval, while denying that the novel product was released due to the Government’s rejection of the proposed price hike.
Regarding the higher price, Gunawardena said that gas prices would be increased if there is a necessity to do so; however, he added, before taking such a decision, it would be vital to survey whether LP gas companies have first taken adequate measures to cut production costs.
He stated that this was because both LP gas suppliers had not taken steps to reduce production costs, but were instead directly passing on such costs onto consumers.
“In a situation when the production cost is still higher than the selling price, even following the reduction of unnecessary costs, then a price increase needs to be considered,” he explained.
He noted that if a company was running at a loss, it could take measures to deduct bonuses and benefits in an effort to bring down production costs.
He also said that the CAA would have to eventually suggest a price for the 18 L cylinders, noting that discussions on the pricing of the new product are still underway.
“I believe in a free market; there should be regulations, but there can’t be too many regulations,” said Gunawardena, elaborating that such market circumstances possibly tarnish the free market policy by restricting the free operation of an individual or company, ultimately affecting the economy.
The 18 L cylinder by Laugfs has also been added to its website, depicting that the said cylinder, in fact weighs 9.7 kg. Meanwhile, Litro recently introduced its own 18 L product as a “Premium Hybrid” cylinder priced at Rs. 1,395, which caused huge controversy, as it was marketed as being a higher quality product, a claim which the CAA’s investigation proved to be untrue.