Sri Lanka’s state-owned LPG distributor, Litro Gas Lanka Ltd, has come under scrutiny after a sudden amendment to its latest international tender raised questions of transparency, competition, and national energy security.
The tender, issued on August 27 to procure 380,000 metric tonnes (±20%) of liquefied petroleum gas (LPG) for 2026, officially closed in mid-September. Yet, just before the deadline, Litro introduced a controversial new clause to its conflict-of-interest section, igniting industry alarm and political criticism.
The new clause, Section 11, Clause 4.2 (VIII), states that: “Bidders shall be permitted to lease the competitor’s terminal facility in Hambantota. However, Litro will bear no responsibility for the product or any related logistics arrangements until the product is delivered for the Litro CBM terminal.”
While appearing to offer flexibility, critics argue the amendment effectively nudges suppliers toward using infrastructure owned by LAUGFS Gas, Litro’s direct competitor. The Hambantota terminal, long a flashpoint in Sri Lanka’s energy sector, is once again at the center of debate.
Currently, Litro relies on a relatively modest 8,000 MT terminal at Kerawalapitiya and smaller facilities at Mabima to meet national demand, which averages 32,000 MT per month.
This forces frequent shipments to maintain supply. By contrast, LAUGFS Terminals Ltd operates a state-of-the-art 30,000 MT facility in Hambantota alongside a 3,000 MT Mabima terminal, giving it a significant storage and logistical advantage.
“It is like asking a state company’s suppliers to pay rent to its competitor,” one energy analyst noted, warning that dependence on a rival’s facility could undermine Litro’s long-term independence and bargaining power.
This is not the first time Hambantota’s role has stirred controversy. Back in June 2021, the government proposed a public-private partnership allowing Litro and LAUGFS to jointly use the Hambantota terminal. LAUGFS Chairman W.K.H. Wegapitiya argued the plan would cut import costs by US$70 per metric tonne and help stabilise retail LPG prices.
A committee was appointed to study feasibility, but the proposal stalled amid political uncertainty and fears of losing strategic control over energy assets.
Procurement specialists now warn that Litro’s amendment may not meet procedural standards. Under Sri Lanka’s procurement rules, any substantive change should be issued as an addendum and circulated equally among bidders. Failure to do so risks legal challenges before the Procurement Appeal Board or courts.
For international suppliers, the clause adds operational risks by tying logistics to a private competitor, potentially raising costs and limiting flexibility. For consumers, fewer bidders could mean higher prices and weaker supply security.
As the controversy unfolds, Litro’s procurement decision is likely to face growing scrutiny—not only from industry stakeholders but also from policymakers concerned about Sri Lanka’s fragile energy security.
