Litro, LAUGFS up LPG prices

• State-owned entity Litro suffers Rs. 10 b loss without a hike 

The price of Liquified Petroleum Gas (LPG) has been increased from today after the essential item was removed from the Maximum Retail Price (MRP) regime.

Litro Gas Ltd. said its 12.5 kg LPG cylinder has been increased by 84% to Rs. 1,257 and it will now be sold at Rs. 2,750. Previously, the 12.5 kg Litro LP gas cylinder was sold at Rs. 1,493 and the new price reflects a Rs. 50 reduction from Litro’s actual cost. Some pro-Government activists took comfort from the fact that latest prices meant only a 5% increase from 2013 levels. 

The 5 kg gas cylinder has been increased by Rs. 503 and it will now be sold at Rs. 1,101. The 2.5 kg gas cylinder has been increased by Rs. 231 and the new price is Rs. 520.

The decision to not increase gas prices parallel to cost fluctuations during the past nine months resulted in a loss of Rs. 10.5 billion for Litro Gas Lanka, sources added.

LAUGFS separately announced its revised prices. Within the Colombo district its 12.5 LPG cylinder will cost Rs. 2,840 up by Rs. 984.  The 5 kg cylinder has been increased by Rs. 393 to Rs. 1,136. LAUGFS last month got Consumer Affairs Authority (CAA) approval to hike prices though below its desired level and remained more expensive than Litro.

Both Litro and LAUGFS had been clamouring for a fair hike given spikes in global markets. Litro said the global price of LP gas increased to an unprecedented amount of $ 800 per ton on 1 October. 

“When converted directly to a 12.5 kg cylinder, the cost of the product adds up to Rs. 2,021. However, at present, the price of a 12.5 kg Litro gas cylinder is set at Rs. 1,493, and once the shipping, insurance and other necessary costs are taken into account, the additional cost of manufacturing a 12.5 kg LP gas cylinder amounts to Rs. 700,” Litro sources said last week.

Accordingly, the cost of manufacturing a 12.5 kg LP gas comes up to Rs. 2,800. As a result, Litro Gas Lanka would be compelled to increase the price of a domestic gas cylinder to Rs. 2,800 in order to cover the cost of purchase, shipping, insurance and other necessary expenses.

LAUGFS suspended operations for a month before coming back to the market in late August after it managed to secure supplies. The return of LAUGFS Gas is following the CAA on 12 August approving an upward revision of LPG prices of the 12.5 kg cylinder to Rs. 1,856 and 5 kg cylinder to Rs. 743 to be applicable in the Colombo District.

Wegapitiya said the recently granted price revisions by the CAA were contrary to the Supreme Court approved pricing formula and therefore were “not acceptable”.  

“Nevertheless, as a respected publicly quoted company, we will accept this increase under protest and while reserving our right,” Wegapitiya said.