Mon, 21 Jun 2021 Today's Paper

Govt. reverses decision to acquire 40% stake in Laugfs Terminal

9 June 2021 03:14 am - 0     - {{hitsCtrl.values.hits}}

A A A

  • Limitations seen in achieving cost benefits and price stability
  • Concerns raised over supply risks in procuring LPG from same source

The government has reached a decision to withdraw from a joint memo presented to the Cabinet of Ministers to acquire 40 percent stake in Laugfs Terminal Limited, a fully owned subsidiary of Laugfs Gas PLC.


The Minister of Finance jointly with the Minister of Trade earlier submitted a Cabinet memo to acquire 40 percent stake in Laugfs Terminal, which owns and operates a LPG storage terminal in Hambantota port to jointly procure LP Gas with a view to maintain LPG prices at current levels through possible cost benefits.


Sri Lanka Insurance and Litro Gas were expected to acquire 40 percent stake under this proposed PPP venture. 
However, several issues were raised against this venture including limitations in achieving cost benefits that would enable the LPG prices to be maintained at current levels. 


At the Cabinet meeting held on 17th of last month, the Cabinet of Ministers pointed out that it’s not viable to retain the current LPG prices under the current market environment where LPG prices are on a rising trend. 
Further, concerns over supply risks in procuring LPG from the same source were also raised. 


The State-owned Litro Gas commands over 70 percent share in the country’s duopoly LPG market while Laugfs Gas serves the remainder of the market. 

Laugfs Gas commissioned the largest storage terminal in May 2019, with an investment of Rs.11.9 billion mostly financed through borrowings. 


However, the facility operated below its capacity of 40 percent in 2019/2020 financial year.


“In consideration of the existing excess storage capacity of the LPG terminal located at the Hambantota International Port, owned by Laugfs Terminals Limited, which is a subsidiary of Laugfs Gas PLC, the government has recognised the possible cost benefits to the country derived from the economies of the scale of operations, by way of joint procurement of LP Gas through the formation of a private public partnership between State owned Litro Gas Lanka Limited and Laugfs Terminal Limited,” Laugfs Gas recently stated in a stock market disclosure. 
Although, the operating profit of Laugfs Terminals improved to Rs.58 million in the 2019/2020, the company still remains in red as it made a loss of Rs.162 million due to high finance costs. 


Further, it hasn’t been able to increase its LPG market share in the country significantly. 


The Cabinet paper also included a proposal to remove Port and Airport Levy to maintain current market price on 12.5 kg LPG cylinder. Accordingly, all seven proposals presented in the Cabinet paper are expected to be withdrawn through a note to the Cabinet of Ministers. 


Currently, Litro Gas maintain around Rs.100 margin on 12.5 kg LPG in the Western Province.

 

See Kapruka's top selling online shopping categories such as Toys, Grocery, Flowers, Birthday Cakes, Fruits, Chocolates, Clothing and Electronics. Also see Kapruka's unique online services such as Money Remittence,News, Courier/Delivery, Food Delivery and over 700 top brands. Also get products from Amazon & Ebay via Kapruka Gloabal Shop into Sri Lanka.

  Comments - 0

See Kapruka's top selling online shopping categories such as Toys, Grocery, Flowers, Birthday Cakes, Fruits, Chocolates, Clothing and Electronics. Also see Kapruka's unique online services such as Money Remittence,News, Courier/Delivery, Food Delivery and over 700 top brands. Also get products from Amazon & Ebay via Kapruka Gloabal Shop into Sri Lanka.

 

 

Add comment

Comments will be edited (grammar, spelling and slang) and authorized at the discretion of Daily Mirror online. The website also has the right not to publish selected comments.

Reply To:

Name - Reply Comment


Statistical blunders expose administrative weaknesses

Information helps save lives and during a pandemic a free-flow of vital, accu

Vavuniya tusker’s demise DID TOO MANY ‘COOKS’ SPOIL JUMBO’S RECOVERY?

On June 11 Sri Lanka lost another one of its magnificent tuskers that succumb

Life and Times of Dynamic “Thamby” Arumugan Thondaman

Thamby”in Tamil means younger brother. It is also used widely as a pet name



See Kapruka's top selling online shopping categories such as Toys, Grocery, Flowers, Birthday Cakes, Fruits, Chocolates, Clothing and Electronics. Also see Kapruka's unique online services such as Money Remittence,News, Courier/Delivery, Food Delivery and over 700 top brands. Also get products from Amazon & Ebay via Kapruka Gloabal Shop into Sri Lanka.