LITRO Gas Chief rebuffs Bandula Gunawardena’s allegations

Litro Gas Lanka Executive Chairman Shalila Moonesinghe

The Chairman of Litro Gas Lanka Ltd. yesterday set the record straight with regard to the procurement of Liquefied Petroleum Gas (LP Gas) by the sole distributor Litro Gas Lanka Ltd. Finance Minister Ravi Karunanayake had earlier refuted the claims by former Minister Bandula Gunawardena that the Government had approved the privatisation of Litro Gas Lanka Ltd.

Minister Ravi Karunanayake has categorically said that Litro Gas Lanka Ltd., a household name in the country, would never be privatised and the Government would take every effort to pass the benefit of the market fluctuations to the consumers as previously done twice within the six months of the new Government’s time in office.

Bandula Gunawardena had leveled allegations that the Government has also signed a MoU with Shell Gas Ltd. to purchase gas at $ 105 per MT, contrary to international tender procedures.

Litro Gas Lanka Ltd. Executive Chairman Shalila Moonesinghe said that it was the previous Government that purchased LP gas without even calling for tenders at higher price for the last two years from a single supplier in a questionable manner. 

The previous management of Litro Gas Co headed by Gamini Senarath, who was also the then Chief of Staff of former President Mahinda Rajapaksa, had entered into a direct contract agreement with a Dubai-based company to supply LP gas to Sri Lanka for a period of two years up to May 2015, with an additional price increase of $ 9 per MT in the first year and $ 5 in the second year.

Sri Lanka purchases an estimated 190,000 MT + 10% of LP gas annually and this is an abnormal increase by $ 9 in 2013/2014 to $ 135 and to $ 140 in the second year. This questionable action by the previous Government incurred a loss of Rs. 576 million ($ 4.37 million) to the Litro company. The current prices being negotiated are in the range of USD 105/MT and accordingly there will be a savings of Rs. 1,716 million ($ 13 million) within the next two years under the new Government.

It is pity that Minister Bandula Gunawardena who was a powerful minister in the Cabinet of then President Mahinda Rajapaksa could not utter a word against this authoritarian and contradictory action of the all-powerful Chairman Gamini Senarath. If not for this high-handed arbitrary action which incurred a  revenue loss of Rs. 576 million, the benefit could easily be passed on to the consumers by reducing the selling price of LP gas in the market. 

Present Chairman of Litro Gas Moonesinghe said that the management appointed by Minister of Finance Ravi Karunanayake called for international tenders for the procurement of gas for the next two years under a competitive market price; 12 would-be suppliers were shortlisted and evaluated and since the lowest evaluated bidder did not furnish the required document within the stipulated time period, the tender committee has started the process of negotiation with the other shortlisted suppliers as per the procurement guidelines.

Apart from the technical and financial feasibility, the tender committee, as per the procurement guidelines, will also consider the reliability, dependability, consistency and the availability of tankers at the disposal of the suppliers in addition to their past experiences in dealing with such a vast quantity of 190,000 MT per year. 

The Litro Gas Lanka Chairman assured that under the existing procurement process, which is under negotiation, it would be possible to negotiate the best market price which is around $ 34.25 less per MT than the previous negotiated price of $ 140 and the cumulative savings from the Gas supplies to Litro Gas Co in the next two years is expected to exceed Rs. 1,716 million ($ 13 million). 

Due to best market practices adopted by the ‘Yahapalana’ Government under the guidance of Minister Ravi Karunanayake in profit maximising, it will help further pass the benefit to the consumers in future in addition to price reduction of gas already made twice within the first six months of this Government.