Joint gas company Siyolit’s status unclear
- No alternative proposed by Litro yet
BY Pamodi Waravita
The state-run Litro Gas Lanka Ltd. is yet to propose an alternative solution to the Treasury Department’s newly formed special purpose vehicle (SPV) gas company Siyolit (Pvt.) Ltd., as requested by President’s Secretary Dr. P.B. Jayasundera last week, high-level officials claimed yesterday (30).
Speaking to The Morning, officials claimed that Dr. Jayasundera has requested Litro Gas Lanka to present a solution, as Litro Gas Lanka is allegedly unhappy and dissatisfied with the operational procedures of Siyolit.
Confusion has arisen over the status of Siyolit as Treasury Secretary S.R. Attygalle on 29 September told The Morning that he is not aware of a meeting which was held with Dr. Jayasundera last week, which led to the dissolution of the said SPV.
Siyolit (Pvt.) Ltd. was allegedly set to negatively impact Litro Gas Lanka whilst boosting the prospects of the privately owned Laugfs Gas PLC, by making Litro Gas Lanka heavily reliant on Laugfs Gas for its operations, where high-level officials told The Morning that they feared that it would leave Litro Gas Lanka “at the mercy” of Laugfs Gas.
“This company was formed to benefit Sri Lanka, and not to favour any private entity. I am not aware of any decision taken at the Presidential Secretariat last week, as I did not attend the meeting that was held there,” Attygalle said.
Attempts to contact Dr. Jayasundera regarding the matter proved futile.
The said SPV has been formed for the purpose of a joint procurement mechanism for gas in bulk to both Litro Gas Lanka and Laugfs Gas, to decrease the cost of procurement and to ultimately provide a cheaper price for the consumer.
Whilst Litro Gas Lanka owns 75% of its shares, Laugfs Gas holds 24% of its shares, with the Treasury Department owning the remaining 1%.
However, it is learnt that although it was initially decided to form a Director Board comprising of three representatives from Litro Gas Lanka, one from Laugfs Gas, and to appoint the Litro Gas Lanka Chairman as the Chief Executive Officer (CEO) of Siyolit, this decision has later been changed to give two representatives to Laugfs Gas and to appoint an independent CEO.
Speaking to The Morning on 29 September, Co-operative Services, Marketing Development and Consumer Protection State Minister Lasantha Alagiyawanna explained the benefits of procuring gas in bulk as it would ultimately lead to a cheaper gas price for the consumers.
“Siyolit was formed under the guidance of the Finance Ministry and the Treasury Department. I don’t know about these allegations, that it would be disadvantageous to Litro Gas Lanka. However, all I have been informed is that Siyolit was formed,” said Alagiyawanna.
At the cabinet press briefing held on 28 September, Alagiyawanna said that the Government’s goal in forming Siyolit is to reduce the inefficiencies of both Litro Gas Lanka and Laugfs Gas.
“Interested parties have called into question the intentions and integrity of the recently formed liquefied petroleum gas (LPG) buying firm Siyolit (Pvt.) Ltd. headed by Susantha Silva. It has been observed that the directorate of this firm is lopsided with two directors being allocated to Laugfs Gas which has a 20% market share, while Litro Gas Lanka, with over 80% market share, only being allocated three directors,” a press release by the Litro Surakeeme (Protection) National Unity organisation said on 17 September.
A letter was sent to the Treasury Department by Litro Gas Lanka, requesting an explanation for this disproportionate representation in the newly formed SPV’s Director Board, where Litro Gas Lanka, despite owning majority shares, has only three seats whilst Laugfs Gas has two. However, when The Morning contacted Treasury Secretary Attygalle on 19 September regarding the matter, he said that he has not been informed of any concerns.
Furthermore, it has been proposed to utilise the terminals owned by Laugfs Gas at the Hambantota International Port to store the cargo which will be jointly procured by Litro Gas Lanka and Laugfs Gas.
“Further, Siyolit (Pvt.) Ltd. insists on buying from Litro Gas Lanka only via the Laugfs Gas bunkering facility which necessitates transporting LPG from the Litro Gas Lanka facility in Kerawalapitiya to Hambantota by sea. Litro Gas Lanka is compelled to obtain the necessary infrastructure for this process from Laugfs Gas at an additional cost,” alleged the Litro Surakeeme National Unity.
The Litro Surakeeme National Unity, composed of employees and civil society members, have alleged that these actions could sabotage the profit-making Litro Gas Lanka in favour of its competitor. Litro Gas Lanka currently holds approximately 70% of the market share whilst Laugfs Gas holds only 30% of it.