First Salvo

Shell Gas is to jack up rates of domestic gas by Rs. 57.00 from Monday, on the heels of a court ruling last week that allows the company to peg rates to global prices. Shell Gas is to jack up rates of domestic gas by Rs. 57.00 from Monday, on the heels of a court ruling last week that allows the company to peg rates to global prices. That will take prices of a 12.5 kg cylinder of Liquid Petroleum Gas (LPG) from Rs. 793 to Rs. 850 based on a pricing formula, pegged to world rates.

Last week, the Court of Appeal ruled that the Consumer Affairs Authority could not control Shell Gas Lanka’s pricing, by categorising gas as an essential item.

LP gas prices mirror crude oil prices closely and have climbed as oil prices went up. Shell, majority owned by the Royal Dutch Shell Group, says losses this year due to selling below cost will exceed Rs. 500 million.

CAA asserted powers in its act after Shell and Laugfs stared increasing LP gas prices in step with changes in the world market.

Local gas prices are pegged on a two-month formula so that price revisions can be spread out. But this builds up a two-month lag.

Generally, global gas prices build up towa