- Litro Gas Lanka Ltd has misled the consumer by selling the same form of old cylinder claiming to be more efficient, but it contains reduced volume of gas
- Minister Bandula Gunawardena said in parliament recently that he cannot take action against the price hike as it is up to the Gas Company to take decisions regarding pricing
- In order to give a relief to Litro Gas Lanka Ltd, the Finance Ministry recently reduced the Ports Authority Levy imposed on LPG
Startling revelations have surfaced as to how the Ministry of Consumer Affairs and the Consumer Affairs Authority-the apex government institution with the mandate to protect consumer interest- have been ignorant or turned a blind eye to the price increase of Liquefied Petroleum Gas (LPG) by Litro Gas Lanka Ltd.
Although these two authorities maintain that they cannot take action against Litro Gas applying the Consumer Affairs Act for introducing a new ‘pack’ for a higher price, the Daily Mirror wishes to expose the government’s questionable move on public interest as Litro Gas consumers complain of an unavailability of 12.5kg cylinders at Litro Gas agents.
At a meeting held on April 27, 2021 with the State Minister of Co-operative Service, Marketing Development and Consumer Protection Lasantha Alagiyawanna and Litro Gas Lanka Ltd Chairman the latter has assured that 12.5kg cylinders are available in the market, except at any of the gas distributors along the High Level Road.
“Only the new 18 litre cylinder is sent to us, but not the old 12.5kg cylinder. But we have enough of 2.3kg and 5kg in stock,” the distributors told this newspaper.
Litro Chairman’s letter to the Chairman CAA
A very reliable senior official at the Consumer Affairs Authority (CAA) on conditions of anonymity told this newspaper that the authority can take legal action against Litro Gas for misleading the consumers by introducing a gas cylinder where less gas is filled into the old 12.5kg gas cylinder claiming that clients can save money as a result. According to sources Litro Gas Lanka Ltd has misled the consumer by selling the same form of old cylinder claiming to be more efficient, but it contains reduced volume of gas.
“This has been done to hoodwink the consumers. The price of a 12.5kg gas cylinder in Colombo and its suburbs is sold at Rs.1494. But Litro Gas Lanka Ltd has named the 12.5kg cylinder ‘premium hybrid’ which is priced at Rs.1395. However it does not contain 12.5kg of gas, but carries only 9.18 kg (18 litres). If they wanted to introduce a gas cylinder with a lesser weight they should have introduced a small cylinder. It is unknown as to why the CAA is dragging its feet without instituting legal action against Litro Gas Lanka Ltd for misleading the consumers,” sources said. According to the sources Litro Gas Lanka Ltd claims that it is incurring losses by selling gas for a lesser price when the world prices of LP Gas have risen.
"When contacted Director Legal at CAA Deepthi Tissera as to what action it would take against the arbitrary price increase by Litro Gas Lanka Ltd Tissera said that the authority cannot take any action against this move as the newly introduced gas cylinder is a ‘new product’"
“In order to give a relief to Litro Gas Lanka Ltd, the Finance Ministry recently reduced the Ports Authority Levy imposed on LPG. Despite this it is questionable as to why Litro wants to increase the prices further,” the sources queried. Now it has come to light as to how Litro, the household name for LPG has misled its consumers through a price reduction claim. According to the sources if Litro Gas Lanka Ltd can review its unnecessary expenditure on vehicles and other benefits given to its top management, they can easily overcome the said losses.
“The remuneration packages earned to its top management are enormous. Although they claim that they set about
Section 18 of the CAA Act
streamlining the institution, they have come to earn for themselves and not to serve the country,” sources added.
It is surprising to note as to how Consumer Affairs Minister Bandula Gunawardena said in parliament recently that he cannot take action against the price hike as it is up to the Gas Company to take decisions regarding pricing.
“Litro Gas Lanka Ltd is maintained by state funds. Hence how the Minister can say that he cannot take any action when the consumer rights are violated? Gas was made an essential commodity in 2003 and the prices cannot be increased on their whims and fancies sans proper approval. In this instance the Gas Company can say that the weight of gas in the cylinder is different to what have been Gazetted and the CAA cannot take any action. But still they are filling 18 litres to the same old 12.5kg cylinder in order to hoodwink the customers,” sources alleged.
Ministry of Consumer Affairs Secretary Badrani Jayawardene when contacted said that the authority did not grant approval to Litro Gas Lanka Ltd to increase gas prices. “We were informed that they were going to introduce a new cylinder and before we could send a reply, Litro has introduced this Premium Hybrid Cylinder to the market at a lower price,” Jayawardene said.
When Ms. Jayawardene was asked whether she knew that the price of a kilogram of LPG had been increased through the newly-introduced premium hybrid cylinder, she said she did not do any calculation regarding the mentioned cylinder. “Since we were informed that the price was reduced by Rs.100, I didn’t go into details,” she added.
According to Jayawardena before she had responded to Litro Gas Lanka Ltd regarding the proposed new cylinder the latter was planning to introduce to the market, the letter sent to the CAA Chairman too clearly shows that Litro Gas Lanka Ltd, without any approval from the CAA, had launched the new premium pack in the market.
Litro Gas Lanka Ltd Chairman Anil Koswatte by letter dated April 9, 2021 to the Chairman CAA, regarding the introduction of LPG new premium hybrid pack – the 18 litres new cylinder- to keep up with the international standards stated, “We are pleased to inform you that we will be introducing a new premium pack consisting an 18 litre cylinder of LP Gas at the Colombo market price of Rs.1395. Please take note that this new premium pack will be an addition to the existing product range”.
‘Further we wish to inform you that the new hybrid cylinder category does not fall within the preview of Section 18 of Consumer Affairs Authority Act No: 9 of 2003’.
“This alone shows how Koswatte has taken the law unto his hands and has taken decisions arbitrary without the Ministry or the CAA approval,” CAA sources alleged.
When contacted Director Legal of CAA Deepthi Tissera as to what action it would take against the arbitrary price increase by Litro Gas Lanka Ltd, Tissera said that the authority cannot take any action against this move as the newly introduced gas cylinder is a ‘new product’.
No provisions in CAA Act to help take action
“The CAA can take action if Litro has increased its prices of the 2.3kg, 5kg or 12.5kg cylinders. Here they have reduced the prices by hundred rupees and introduced a new product. Hence the CAA Act doesn’t offer any provisions to take legal action against them,” she added.
Although Director Legal at CAA maintains the stance of the authority, as per Sections 10, 18, 19 and 31 of CAA Act No: 9 of 2003, the CAA has all the powers to take action against the arbitrary price increase by Litro Gas.
Section 10 of the CAA Act says, ‘(1) The Authority may for the protection of the consumer- (a) issue general directions to manufactures or traders in respect of labelling, price marking, packaging, sale or manufacture of any goods;
(3) Any manufacturer or trader who fails to comply with any direction issued under sub-section (1), shall be guilty of an offence under this Act
(4) Any person who removes, alters, obliterates, erases or defaces of any label description or price mark on any goods in respect of which a direction of sub section (1), has been issues or sells or offers for sale any such goods from or on which the label, description or price mark has been removed or altered, obliterated, erased, or defaced shall be guilty of an offence under this Act
When this writer told Tissera that what she claims to be the ‘new product’ is actually the same old 12.5 kg cylinder being filled with gas where during the filling process the capacity of the cylinder is tampered with to hold 18 litres which amounts to an offence as per Section 10 of the CAA Act, Tissera affirmed that this is a new product and the CAA cannot take any action against the Litro Gas Lanka Ltd.
"Although these two authorities maintain that they cannot take action against Litro Gas applying the Consumer Affairs Act for introducing a new ‘pack’ for a higher price, the Daily Mirror wishes to expose the government’s questionable move on public interest as Litro Gas consumers complaint of an unavailability of 12.5kg cylinders at Litro Gas agents"
Attempts to contact Litro Gas Lanka Ltd Anil Koswatte had failed. Also futile were this newspaper’s efforts to tap the officials of this company to reach the chairman via phone.
Manager Sales and Corporate Communications of Litro Gas Lanka Ltd, Ketheeswaran and Corporate Communicator Litro Gas Lanka Ltd Vinuri Perera despite promising to give this writer the direct landline telephone number to the Chairman’s Office, failed to deliver with their promises.
When asked as to why Litro Gas Lanka Ltd has increased LPG prices without obtaining relevant approval- which is an offence as per the CAA Act; neither Ketheeswaran nor Perera wished to make comments. They requested this writer to refer the press releases issued by the Chairman. “All what we have to say is given in the press release issued by the Chairman. You can get whatever you want from it as we cannot make further comments on this matter,” Vinuri Perera said.
Although Ketheeswaran and Perera maintained that they have issued press releases with regard to the price hike, their press releases don’t mention the fact that the actual price of LPG is higher than that of the standard regular cylinder. The press releases state that the 18 litre cylinder meets international standards and of a higher level of efficiency and delivers better energy utilisation assuring easy handling and storage.
However, MP Kabir Hashim said that what Litro Gas Lanka Ltd Chairman claims regarding the new cylinder is astonishing and misleading.
“The Litro Chairman says that the gas filled in the 18 litre cylinder is more efficient than the contents in the other cylinders. The CAA told me that when they checked the gas in the new cylinder, the report reveals that the contents in the new and the old cylinders are the same. The chairman further states the composition of gas in the old cylinders consist of 70% butane and 30% propane. In order to provide maximum efficiency for cooking purposes, they have brought down the percentage of butane to 50 and increased propane to 50,” Hashim said.
He further said that the claim made by Litro Gas Lanka Ltd Chairman regarding the price increase in the world market in propane is misleading as the price difference between butane and propane is negligible.
“Litro Gas Lanka Ltd Chairman has flouted the laws and should be brought to book; which we are now planning. And also action should be taken against CAA Chairman Major General (Rtd) D.M.S. Dissanayake for not taking action against the price hike. Minister Bandula Gunawardena and his Deputy Lasantha Alagiyawanna too should come before the people and say why they allowed a 27% price hike of LPG when the people are struggling due to the high cost of living,” Mr. Kabir Hashim said.
A senior officer at Litro Gas Lanka Ltd, speaking on conditions of anonymity, alleged that although the management is trying to show that they are incurring losses by selling gas at a lower price when the world gas prices have risen, the real issue the company is facing has been caused due to the mismanagement of funds.
“If one considers the prices of the vehicles the Chairman and the Board of Directors are travelling in, one will notice that the company is unable to bear their costs. Being a state institution functioning with tax payers’ money, their salaries are enormous. Send an application under the Right to Information Act and obtain the details of their monthly remuneration. You will be surprised as to how much they are drawing monthly. They spend lavishly and in return want to increase the price of gas to meet their expenditure. In order to stabilise the gas prices the Finance Ministry brought down the Ports Authority Levy. The more revenue the company gains the more massive bonuses the employees will be paid. That is why they want to go for a price increase highlighting losses,” the sources added.
The sources further queried as to how the management maintains that the newly introduced 18 litre cylinder consists of gas that promises a higher level of efficiency. “Now the CAA has sent this gas to a private lab to check whether there is a difference in efficiency levels in the new product comparing to the old product,” sources claimed.
According to the old prices, 1kg of LPG in a 12.5kg and 5kg cylinder is Rs.119.44; while 1 kg of gas in the 2.3kg cylinder is Rs.125.65. “Calculations reveal that the weight of gas in the premium hybrid cylinder is stated as 18 litres. They give the weight in litres to mislead the consumers. Its actual weight is 9.18kg. For the new product, the consumers have to pay Rs.151.90 per kg which is an increase of Rs.32.46. Following a meeting with State minister Lasantha Alagiyawanna recently, the Chairman at a press release stated that the 12.5kg cylinder is freely available at all Litro dealers. But the reality is that the agents are supplied with only the 18 litre cylinders and NOT the 12.5kg cylinders. The consumers have no other option, but to buy the new cylinder. If calculated, the buyers now have to pay Rs.1898.75 for 12.5kg which is an increase of 27% which amounts to Rs.405.75,” sources added.
He further said that Litro Gas Lanka Ltd has acted in contrary to the CAA Act and will be guilty of committing an offence if legal action is taken.
Section 31 of the CAA Act states, ‘Any trader who in the course of a trade or business, in connection with the supply or possible supply of goods or services or in connection with the promotion by any means of the supply or use of goods or services; (a) falsely represents that goods or services are of a particular standard, quality or grade, or that goods are of a particular style or model;
(b) Falsely represents that goods are new and
(e) Makes false or misleading statements concerning the existence of, or amounts of price reduction, or price increase;
(g) Makes false or misleading statements concerning the existence or effect of any warranty or guarantee;
Shall be guilty of an offence under this Act’.
“Litro Gas Lanka Ltd has violated the CAA Act and we are puzzled as to why the CAA is still silent and has allowed the consumers to suffer because of this price increase. The Chairman says that the 18 litre cylinder is sufficient for a month for a family of four, but has failed to say that the 12.5kg cylinder is sufficient for one and a half months for a family of four,” sources added.
Meanwhile, former Chairman Consumer Affairs Council N.M. Shaheid when contacted said that as per Section 18 (2) of the CAA Act, no manufacturer or trader shall increase the retail or wholesale price of any goods or services specified under sub-section (1), except with the prior written approval of the authority. Section 19 of the CAA Act also says that, ‘(1) Where it appears to the Director General that any goods are being sold or any services are being provided by a manufacturer or a trader at an excessive price or any market manipulation or other market imperfection exists in respect of such goods or services provided by such manufacturer or a trader the Director General may in consultation with the Authority as he may deem necessary and having regard to whether-
(b) Any category of consumers are significantly affected by excessive price, refer such matters to the council for investigation and report;
(2) The Council shall conclude its investigation and submit its report to the DG within two months of such reference being made to it by the DG.
“The benefits should always go to the consumers. The CAA has to deal with this. They cannot say that they don’t have provisions to take any action. The consumers cannot be hoodwinked. How can the CAA claim that this is a new product? Litro has filled the gas to the same old cylinder and tampered the tag 12.5kg to 18 litre. For these few wordings how can anyone say it’s a new product?” Shaheid said.
Meanwhile, when we asked the present Chairman of the Consumer Affairs Council N.S.M. Samsudeen whether an investigation will be initiated against the LPG price hike, he told this newspaper that it is the CAA that has to forward complaints to the council, if there are any.
“As of now the CAA has not referred any complaints to us,” he added.
However he said that when he inquired from the CAA about the price hike without approvals, CAA Chairman had told him that instructions had already been given to Litro Gas Lanka Ltd to withdraw all the 18 litre cylinders from the market. “I am not aware whether these instructions have been duly followed,” he said.
All attempts to contact CAA Chairman Major General (Rtd) D.M.S. Dissanayake for his comment via phone failed. A text message was forwarded to Dissanayake seeking a comment, but he hadn’t responded to it at the time this paper went for publication.