Gas Formula

August 31, 2007 (LBO) – Sri Lanka’s liquid petroleum gas (LPG) prices are to be adjusted every two months on a price formula agreed with the island’s consumer authority, Shell Gas Lanka said. Economic analysts say frequent changes in LP gas prices, which are only used in a third of the households in the country, would reduce pressure on the exchange rate and inflation, and protect the poorer sections of the population who cannot even afford LP gas. The utility raised the price of a 12.5 kilogram domestic cylinder by 213 rupees Friday to 1,298 rupees and a small 2.3 kilogram cylinder to 239 rupees.

Formula

“The increase in price comes after a long period of discussions and negotiations during which the price of gas was kept artificially low and the company suffered huge losses,” Shell Gas Lanka said in a statement.

Sri Lanka’s Consumer Affairs Authority has moved out of a formula based pricing scheme in 2003 and had been controlling the price of LP gas which has been made into a political hot potato by the country’s left leaning politicians.

Politicians in Sri Lanka have helped drive both the state-owned Ceylon Petroleum Corporation and the Ceylon Electricity Board i