Sri Lanka Shell unit says new tax prevents further price cut

Jan 01, 2009 (LBO) – Shell Gas Lanka, the Sri Lankan unit of the Shell multinational, said a new government tax and its inability to buy locally made liquid petroleum gas is preventing it from further reducing prices.

It said in a statement that the government has imposed a special tax of eight rupees per kilogramme and 100 rupees for a 12.5 kilo domestic gas cylinder from December 31, 2008.

The new tax came a day after the government said the price of a 12.5 kilo Shell gas cylinder would be reduced by 166 rupees as it announced a wide-ranging ‘stimulus package’ to boost economic growth.

Government officials said import taxes would be raised as global commodity prices fell to collect funds to fund the stimulus package.

On November 20, 2008 the government increased the customs duty on imported petrol by 10 rupees when global energy prices started to dive.

The Shell Gas Lanka statement said it cannot buy LPG made by the state-owned Ceylon Petroleum Corporation.

As a result, the company said all Shell Gas supplies for domestic LPG users are imported.

“Because of this Shell gas price is more than that of suppliers who get locally made supplies,” the statement said.

“If Shell Gas Lanka can also get locally made gas it can further reduce the price of a domestic gas cylinder and give further relief to consumers.”

The company also said that because of the special tax imposed from December 31, 2008 the reduction in the price of a 12.5 kilo domestic cylinder has been limited to 166 rupees.

Shell said that on November 1, 2008 the price of 12.5 kilo cylinder was reduced by 78 rupees because of the steep fall in world prices.

The company statement said 51 percent of the firm is owned by the Shell multinational and the balance 49 percent owned by the Sri Lankan government.