Litro shortage due to supplier’s LC hike demand
- Litro supplier demands 109% SBLC increase on $ 27 m facility
- Laugfs hit by USD shortage, inability to open LCs
BY Pamodi Waravita
With both Litro Gas Lanka Ltd. and Laugfs Gas PLC consumers facing gas shortages in the market this week, The Morning learnt that the supplier of gas to Litro Gas Lanka is demanding an increase of the aggregate value of the current letter of credit (LC) facility by 109% as per the terms of the contract, which has led to the current shortage of gas in the market.
“There is a financial hold on the cargo as the supplier is demanding an increase of the SBLC (standby letter of credit) value as per the contract (that will suffice for one month’s supply), which is a 109% increment to the existing facility of $ 27 million due to increasing global gas prices. We have requested intervention from the Central Bank of Sri Lanka (CBSL) and the Treasury Department regarding the matter,” official sources at the Litro Gas Lanka told The Morning yesterday (2).
They added that although the $ 27 million SBLC facility had initially considered future price increments, the current price levels are much higher than the predicted values. However, they assured that operations are continuing despite delays in releasing the cargo.
Meanwhile, Litro announced last night in a press release that ships carrying liquefied petroleum (LP) gas have already berthed in the Colombo Port and that it will take necessary measures to rectify the current temporary shortage of domestic LP gas which are caused by distribution delays. The company said it is in correspondence with the state and private banks to obtain the necessary security to fulfil the supplier’s request which is underway.
Meanwhile, speaking to The Morning yesterday, Laugfs Gas Chairman W.K.H. Wegapitiya said that the US dollar shortage and the inability to open LCs has led to the company being unable to provide the market with adequate stocks. “We have enough stocks for about a week. However, we need to open LCs to meet the future demand,” said Wegapitiya.
The Morning also learnt that Laugfs Gas is likely to further increase their consumer prices this year although Litro Gas Lanka officials told The Morning that the state-run company will not increase their prices again.
Earlier this month, Litro Gas Lanka increased its prices so that the new prices for the Colombo District stand at Rs. 2,675 per 12.5 kilogrammes (kg) domestic cylinder, Rs. 1,071 per 5 kg domestic cylinder, and Rs. 506 per 2.3 kg domestic cylinder. The private player in the market, Laugfs Gas, also increased its prices the same week to Rs. 2,840 for a 12.5 kg domestic cylinder and Rs. 1,136 for a 5 kg domestic cylinder for the Colombo District.