Laugfs Gas urges Govt to introduce transparent mechanism for LPG pricing

May 18, 2018 (LBO) – Sri Lanka’s liquid petroleum gas (LPG) prices should be adjusted using a pricing mechanism that is transparent, impartial and fair, Laugfs Gas said issuing a statement.

There have been significant changes in the LPG prices in the international market, which has had a detrimental impact on the local LPG industry, it said.

“On the long term, there will continue to be global price volatility and other macro-economic factors, which are largely unpredictable, affecting the local LPG Industry,”Thilak De Silva, managing director, LAUGFS Group said.

“Therefore, we believe a fair and effective pricing formula based on key indicators would help address this situation, where consumers would be able to enjoy price benefits arising from decreasing market prices, while ensuring sustainability of the local LPG industry during times of rising world prices.”

This will provide a transparent, impartial and fair mechanism to determine the local LPG retail price in the long run,” he added.

During the period between May 2017 and January 2018 alone, a metric tonne of LPG price has increased by almost 50 percent.

In the statement, LAUGFS Gas PLC stressed the importance of the recent increase in the LPG retail price approved by the Consumer Affairs Authority, while elaborating on the macro-economic conditions that necessitated it.

The Saudi Aramco Contract Price is considered the primary international benchmark for LPG price regulations within the Arabian Gulf and Asian region, and a significant volatility in this contract price was seen directly impacting the LPG retails prices in Sri Lanka.

“In addition, the local LPG retail price is impacted by a number of other macro-economic factors. For example, the world steel prices have been on the rise, which increases the LPG cylinder manufacturing cost,” W.K.H.Wegapitiya, chairman, LAUGFS Group said.

“The rupee depreciation against the US Dollar is another important factor, that negatively affects the local LPG industry, when the costs of imports, transportation, import clearances etc. increase.”

LAUGFS Gas entered the local LPG downstream industry in 2001, and operates in the domestic, commercial and industrial sectors, employing over 350 staff and creating indirect employment opportunities for thousands.