By: Staff Writer
November 15, Colombo (LNW): Behind LAUGFS Gas PLC’s unprecedented 35.75% domestic gas price increase lies a corporate financial crisis that raises uncomfortable questions about business sustainability, procurement risks, regulatory oversight and the growing burden placed on Sri Lankan consumers.
The company’s decision to increase its 12.5 kg cylinder price to Rs. 6,740, effective November 13, has been defended as necessary to achieve a break-even position. However, its latest interim financial statements reveal a business struggling with collapsing revenues, mounting borrowings and deeply negative shareholder equity.
For the quarter ended September 30, 2026, LAUGFS Group recorded a net loss of Rs. 1.54 billion, an alarming 88% increase from the Rs. 818.2 million loss reported during the corresponding period last year.
More disturbing is the collapse in quarterly group revenue, which declined by 57% from Rs. 13.16 billion to Rs. 5.71 billion.
The parent company’s domestic revenue also fell by 28% to Rs. 4.62 billion, reflecting the consequences of prolonged supply disruptions and difficulties in maintaining normal distribution.
The company’s external trading revenue, previously an important component of its business, reportedly fell to zero.
These figures expose the scale of the difficulties confronting LAUGFS. Its accumulated losses have pushed total group equity into negative territory at Rs. 4.33 billion, translating into a negative net asset value of Rs. 12.88 per share.
Meanwhile, short-term borrowings have climbed to Rs. 24.85 billion, while quarterly finance costs increased 13% to Rs. 789.4 million.
This is no longer simply a question of higher international LPG prices. It is a question of whether the company’s existing business structure can remain financially sustainable without substantial restructuring.
The consequences are becoming increasingly visible in the domestic market.
LAUGFS has raised its 12.5 kg cylinder price to Rs. 6,740, compared with Litro Gas Lanka’s unchanged Rs. 4,365. Consumers are therefore being asked to pay Rs. 2,375 more for the same cylinder while the company attempts to restore its financial position.
The company’s difficulties have also placed its US$65 million LPG terminal at Hambantota International Port under scrutiny.
In October, LAUGFS disclosed that it was exploring a possible sale or strategic investment partnership for the facility, indicating the extent of its liquidity pressures.
The terminal was intended to strengthen Sri Lanka’s position as a regional LPG distribution and re-export centre. However, the collapse of the company’s overseas trading operations has undermined that commercial strategy.
The consequences extend beyond shareholders. The company employs workers, operates distribution networks and serves hundreds of thousands of households.
A major restructuring, ownership change or prolonged financial deterioration could have implications for employment, competition and national energy security.
The Government must therefore establish whether the company has a credible recovery plan and whether the Hambantota terminal can operate under a commercially viable model.
The most important unanswered question is whether consumers are effectively financing the survival of a company whose accumulated financial problems extend far beyond the cost of importing gas.
A break-even price may be commercially necessary. But it cannot become a substitute for transparency, accountability and independent scrutiny of the decisions that brought a major domestic energy supplier to this position.