Laugfs Gas seeks support from Central Bank to procure LPG shipments

The Central Bank (CB) is likely to instruct State-owned banks to extend letter of credit (LC) facilities to Laugfs Gas PLC, which is struggling to procure LP gas (LPG) shipments amid the on-going foreign exchange crisis, according to industry sources.

Laugfs Gas officials have held several rounds of discussions with the CB as private sector banks are unable to extend LC facilities to import required LPG to
Laugfs customers.

Currently, Laugfs Gas has only been able to import less than 30 percent of the LPG demand of its customers. Sri Lanka’s duopoly LPG industry consists of State-owned Litro Gas, which caters to about
80 percent of the market and Laugfs Gas, which caters to the remaining
20 percent.

Earlier, Laugfs Gas and Litro Gas attempted to jointly procure LPG supplies to the country through the special purpose vehicle (SPV), Siyolit (Pvt.) Ltd based on a proposal by the former Secretary to the President, P. B. Jayasundara. 

The joint procurement was expected to allow the country to procure a higher quantity of LPG, at a lower price. However, it was shot down by Litro Gas eventually, and the SPV was dissolved two months ago.  “There’s a misunderstanding between the two companies, that has to be dealt first in order to develop the industry,” an industry analyst said. For the quarter ended December 31, Laugfs Gas’ revenue declined by 25 percent YoY to Rs.7.9 billion and the company ended in red recording a loss of Rs.978. 64 million despite steep LPG price increases in local market. (Nishel Fernando)