Laugfs unhappy over H’tota terminal delay

• Pipeline access to $ 80m terminal hampered after port handover to Chinese company 
• Chairman says April opening postponed after issue unresolved for months 
• Charges officials not supporting local investors, believes venture could boost export revenue significantly  
• Alleges delays directed at drumming Laugfs out of venture 

By Uditha Jayasinghe  

Laugfs Gas is raising concerns over the continued delay in resolving pipeline access to its $ 80 million LPG terminal in the Hambantota investment zone and called on the Government and the Chinese operator of the port to resolve the issue.  

Laugfs Holdings Chairman W.H.K. Wegapitiya told the Daily FT that construction work on the pipeline linking the terminal to the jetty had been halted by the Sri Lanka Ports Authority (SLPA). 

A stock exchange filing in early January by Laugfs Gas expressed optimism that the issue would be resolved but Wegapitiya told the Daily FT that despite numerous representations to the SLPA and other government authorities no headway had been made in allowing the company to recommence construction. The terminal opening, which was initially expected in April, will also be delayed due to lack of pipeline access. 

“This is a very serious problem. It’s like being denied an access road after you’ve built a house. Without the pipeline the terminal cannot function. Because of this issue the opening of the terminal has been postponed,” Wegapitiya said. 

Laugfs Gas was the only Sri Lankan company to invest in Hambantota, pointed out the Chairman, who described the situation they had faced as “pathetic” after the port and its adjacent investment zone were handed over to China Merchants Ports Holdings (CMPH) in a long-term lease last year. He also charged that the long-term plan of CMPH could be to drum Laugfs out of the zone and force a takeover sale of the terminal.

“From day one they have harassed us and not allowed us to do our work. We began this investment before the port and investment zone was handed over and the officials have a duty to ensure that local investors are protected. How can local companies protect their investments when they are treated unfairly and their concerns are not addressed?” he asked. 

The terminal was built to import LPG in bulk, store it and then reship it to nearby destinations in South and East Asia as well as to the east coast of Africa. Wegapitiya noted that continued delays in the terminal were losing the Government significant investment revenue. 

“We have had significant interest in this project and we believe that if we are allowed to operate we can contribute 6% of the Government’s export revenue target by 2020. That is how important this project could be to Sri Lanka but we are not getting any support.”