- Daily supply raised to 1,500 MT
- 25,000 MT secured, stock in Maldives
- Over 635,000 cylinders released this week
Litro Gas Lanka Ltd. is working with the Ministry of Trade to establish an emergency mechanism to manage future Liquefied Petroleum Gas (LPG) supply disruptions, alongside long-term plans to strengthen storage capacity.
Litro Chairman Channa Gunawardana told The Sunday Morning that the current supplier, Swiss-based Geogas, was the only source even for the additional quantities required to stabilise the market.
According to him, Geogas has already procured around 25,000 MT from the US and has the stock positioned at a vessel stationed in the Maldives.
“It is easier for us to bring in even smaller, urgent quantities directly from them, rather than buying from another supplier. There might be occasional delays of a day, but the Maldives-based stock reduces the risk of prolonged shortages as it is available in the region,” he said.
Last week, an alleged sudden demand spike claimed by the Government and Litro raised public concerns over a potential shortage.
According to the Government, the shortage stemmed from alleged operational delays by LAUGFS Gas PLC, driving consumers toward Litro Gas.
Trade Minister Wasantha Samarasinghe, addressing the situation in Parliament and clarifying the domestic supply chain, said: “There is no actual LPG shortage, but panic buying has caused difficulties due to supply delays by LAUGFS Gas. LAUGFS supply stopped for several days, causing consumers to shift to Litro, which in turn created a shortage at Litro. This problem developed over the past two weeks after LAUGFS suspended its distribution.”
He also detailed the Government’s response to stabilise the market: “We have increased the daily supply of Litro Gas from 1,200 MT to 1,500 MT. We currently hold sufficient stocks for three days, with two more shipments due on Sunday and Tuesday. A LAUGFS Gas shipment is also expected on 25 February. LAUGFS has been warned to maintain continuous distribution without failing consumers,” Samarasinghe added.
When contacted by The Sunday Morning, Litro Chairman Gunawardana confirmed the sudden surge in daily requirements.
“Our normal daily demand of 1,100 MT to 1,200 MT has surged to between 1,500 MT and 1,600 MT because people shifted to Litro when LAUGFS was unavailable. While we could not adjust immediately, we have taken necessary action. Cylinders are now entering the market consistently and the situation will soon settle,” Gunawardana stated.
To mitigate the shortage, Litro Gas distributed 284,000 domestic refill cylinders on Tuesday (17) and Wednesday (18) and is planning to issue a further 351,000 cylinders by the end of the week.
“Three incoming vessels will deliver approximately 11,000 MT. Our total requirement for this month is 28,000 MT, but we will receive a surplus, bringing the total to about 29,000 MT,” Gunawardana explained.
He clarified that as household demand made up the majority of consumption, the extra cylinders being brought primarily consisted of domestic market cylinders, including widely used 12.5 kg units.
Market dynamics were also influenced by recent pricing variations. Earlier in February, LAUGFS Gas increased the price of its 12.5 kg cylinder to Rs. 4,330, while Litro Gas maintained its price at Rs. 3,690.
“Our lower price could indeed be a contributing factor. However, as a State company, our responsibility is to provide gas at an affordable price, so we maintain it as much as possible. We cannot increase the price simply to reduce demand. While pricing may have a slight impact, the primary reason for this spike is the unavailability of LAUGFS Gas,” Gunawardana acknowledged.
Addressing speculations about Litro Gas changing its long-time supplier OQ Trading to Swiss-based Geogas, Gunawardana dismissed the claims: “This situation has nothing to do with our new supplier. Regardless of the supplier, we receive a vessel every three days. When local demand suddenly spikes, we cannot secure an extra vessel within 24 hours. It naturally takes a couple of days. Such minor delays have happened in previous years as well.”
“We have a long-term expansion plan rolling out in the coming months, which we have been working on since January. The Trade Minister is constantly in touch with us regarding contingency plans. Consequently, we have ordered an excess quantity of 38,000 MT for March to ensure we can fully serve the market if any issues arise,” he added.