• Litro granted access to LAUGFS Hambantota terminal storage
• LAUGFS permitted to divert over 20% of exports to stabilise local LPG supply 

Sri Lanka’s two Liquefied Petroleum Gas (LPG) providers, State-owned Litro Gas Lanka and LAUGFS Gas, have reached a ‘conceptual understanding’ that will enable both companies to expand national storage capacity while sourcing additional LPG.

“We have signed a Memorandum of Understanding (MOU) that allows Litro to utilise storage at the LAUGFS terminal, while both companies continue to procure additional gas either jointly or separately. From a national perspective, it does not matter whether the stock is purchased by Litro or LAUGFS, as Sri Lanka will effectively have access to an additional 30,000 MT of LPG,” Litro Chairman Channa Gunawardana said, speaking to The Sunday Morning.

He explained that the arrangement was planned for an initial three-month period, during which Litro would pay a throughput fee to LAUGFS for the use of storage facilities.

“The agreement is only a conceptual understanding structured as a temporary arrangement for three months, during which Litro will pay LAUGFS a storage and handling fee. However, gas stored in Hambantota still needs to be transported to Colombo using smaller vessels for bottling and distribution,” Gunawardana added. 

The arrangement follows global shipping disruptions and rising geopolitical tensions in the Middle East. Addressing Parliament, President Anura Kumara Dissanayake said an interim measure had been introduced, allowing Litro to utilise 15,000 MT of storage capacity at the 30,000 MT LAUGFS terminal in Hambantota. 

The arrangement is intended to strengthen national buffer stocks during a period of heightened uncertainty in global shipping routes.

Meanwhile, a representative of LAUGFS, speaking on condition of anonymity, said that the cooperation remained flexible to allow both companies to respond quickly to changing market conditions.

“The Government and Litro have been supportive of collaboration with LAUGFS, but much of the understanding is currently operational and based on verbal communication rather than being fully formalised. Given the ongoing Middle Eastern tensions, both companies are maintaining flexibility and will formalise further arrangements if required,” the representative said.

According to the representative, LAUGFS has allocated up to 15,000 MT of storage capacity to Litro under the arrangement, although the facility has not yet been utilised for Litro shipments.

“Litro will pay a throughput fee if the storage is used, but at present the capacity has not been used. Our domestic market operations are continuing normally and supply remains stable,” the representative noted. 

The representative also confirmed that LAUGFS would continue to comply with all applicable taxes and duties, including Value-Added Tax (VAT) and the Ports and Airports Development Levy (PAL), in order to obtain the necessary clearances from the Board of Investment of Sri Lanka. As a precautionary measure, the Government has also temporarily allowed LAUGFS to divert more than 20% of its export quota to the local market if necessary.

Approximately 81% of the country’s LPG imports are sourced from the US through the Swiss-based supplier Geogas. 

The Litro Chairman confirmed that Litro’s supply contract with the company ensured steady deliveries. 

“Geogas will continue supplying its term contractors, and Litro has a one-year contract with the supplier covering 308,000 MT. This ensures a continuous supply. For March alone, we requested 38,000 MT, of which 11,000 MT has already been received, with additional shipments scheduled,” he said. 

He added that a large LPG carrier with a capacity of about 33,000 MT was currently stationed in the Maldives region as part of the supply chain, with another vessel scheduled to arrive on Tuesday (17). 

The LAUGFS representative also confirmed that Geogas was among the company’s suppliers, and said that additional shipments were already in transit.

“We work with multiple suppliers, including Geogas. A second vessel from Geogas is currently unloading and another shipment is expected shortly. We are working to bring additional products into the terminal as soon as possible to ensure uninterrupted supply to the country,” the representative said.