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Litro, Laugfs moot gas pricing formula 

  • Litro mulls ‘logical LPG pricing formula’ 
  • Laugfs Chair laments discontinuation of previous formula 

BY Pamodi Waravita 

Litro Gas Lanka Ltd. Chairman Theshara Jayasinghe said yesterday (13) that the company is now looking at a “pricing logic” or a “logical pricing formula” in a bid to ensure responsible market participation in the future.

“We must ensure that we participate in the market in a fair way. So, even though we don’t have a pricing regime at the moment, we must apply constraints to ourselves and be disciplined. Moving forward, we must adopt a logical pricing formula. We must define it internally and create our own benchmarks. Therefore, in the future, we hope to apply a prudent pricing formula to responsibly participate in the market. I have instructed our Board to logically look at the previous pricing formula that was used as well. We hope to create a pricing logic which will fairly represent the cost of liquefied petroleum gas (LPG) and the price we charge from the people. It will be equitable and just to the public,” Jayasinghe told The Morning yesterday.

These comments came one day after Laugfs Gas PLC Chairman W.K.H. Wegapitiya, speaking on a Derana TV programme on 12 October, said that if the “pricing formula” had continued during the past few years, the sudden shock of a hefty increase in the price of LPG would not have occurred this week.

“We could have gradually increased by about Rs. 200 or Rs. 300 and even had some decreases in the price as well,” added Wegapitiya.

He said that the gas pricing issues were created due to the non-adherence to the LPG pricing formula that was in place.

“Are gas prices really high? No. In 2014, when the price was at $ 780 in the global market, the price of a 12.5 kg gas cylinder stood at Rs. 2,340 in Sri Lanka. Subsequently, the prices were arbitrarily slashed at eight instances, targeting elections. Prior to the presidential election, the price was reduced by Rs. 250. It was further reduced by Rs. 200 when (the election) was at hand. It was again reduced by Rs. 250 following the election,” he continued, adding that this move completely disregarded the components of cost of the market.

Jayasinghe told The Morning that he too feels that a sudden increase in the price of LPG could have been avoided if the pricing formula had been intact.

“There was a pricing formula, agreed to between the Consumer Affairs Authority (CAA) and Litro Gas Lanka. According to that, every two months, we have to review the prices. The CAA unofficially left that agreement in August 2019. If they had continued it, this would not have happened,” said Jayasinghe.

Following a special Cabinet of Ministers’ meeting held on 7 October with President Gotabaya Rajapaksa, the Government decided to remove the price controls on cement, LPG, milk powder, and wheat flour.

Accordingly, the price of a Litro 12.5 kg domestic gas cylinder increased by Rs. 1,182 on 11 October. Laugfs Gas PLC increased the price of its 12.5 kg domestic cylinder by Rs. 984 on the same day. The private entity also increased the price of its 12.5 kg domestic cylinder by Rs. 363 in August of this year.

Litro, Laugfs moot gas pricing formula