Thursday, June 1, 2023

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Parliamentary committee to probe LP gas deal with OQ Trading

The Committee on Public Enterprises (COPE) is to summon the chairman of Litro Gas and its officials today Tuesday 05 to inquire into allegations that a recent deal with Omani company OQ Trading was marred by irregularities.Its Chairman, Prof. Charita Herath stated that the officials of the company have been instructed to appear on Tuesday at 2PM to answer allegations of irregularities in the LP Gas deal with OQ trading of Oman whose local agent was 3D and H company with high political connections.

Accordingly, Prof. Herath stated that the Chairman of Litro Gas, top management including the Board of Directors, the Chairman and the Board of Directors of the parent company of Litro Gas, Sri Lanka Insurance Corporation,as well as the Secretary of the Ministry of Finance have been summoned to COPE.

COPE sources said the officials would be summoned pursuant to a request by a COPE member parliamentarian S.M. Marikar to examine these allegations.On Thursday Litro Gassaid it has successfully procured 100,000 metric tonnes of LP gas which will be enough to supply the country gas requirements for next four months from the Omani company.

However the deal has been marred by controversy with allegations that the contract to Omani company OQ Trading was given even though its price is higher than that offered by Siam Gas Trading.

The original tender for 280,000 metric tons of LPG offered has been changed to 100,000 MT spot purchasing contract and awarded it to OQ Trading, informed sources said.

By this procurement, the country stands to lose millions of dollars at a time where the country has been offered US$70 million by the World Bank for gas purchases and the Government separately was in a position to provide $20 million for LP gas imports.Startling information relating to the deal emerged indicating the influence of an invisible hand in the manipulation of the tender process in favour of the one and only company to dominate in the supply of LP gas to Litro during the past few years.

A former Litro chairman confirmed that local representatives of a foreign company which is supplying gas were behind the severe gas shortage and manipulations of LPG tenders in the country for a long time as well as several officials who are aiding and abetting them.

Over the past two years, Litro has been selecting Oman Trading Gas (OQ Trading) as its gas supplier, on a procurement basis. By February 28, the tender was due on expiration and a new tender was called to select a suitable supplier for the supply of 280,000 MT of LPG for the year 2022-23.

There was an indication of the arrival of a gas shipment on or after July 22 in accordance with an order placed by Oman (OQ) Trading Company which has gained the tender for the spot purchase of 100.000 MT at $105 per MT, sufficient to meet the local demand for four months.

Energy Ministry sources said.Finance Ministry sources revealed that this was an irregular deal ousting the lowest bidder Siam Gas Trading Pte Ltd for 280,000 MT for the year 2022-23 at the price of $96 an awarding the contract to Oman (OQ) Trading which quoted the price of $129 at the opening of bids on April 26.

However Litro Gas requested spot quotation on April 27 for 15,000 MT citing tender processing and finalising delays due to unknown reasons for which Siam Gas offered 16,500 MTat $102. But Litro Gas did not consider this offer and continued to buy from the existing supplier Oman Trading at a higher price which was the price offered to them for the previous tender of purchasing of LP Gas for Litro Gas Lanka Ltd for the period of two years from March 1, 2020.

On May 3, Litro Gas officially informed Siam Gas that their commercial bid has been approved by the Cabinet for the total quantity of 280,000 MT at the price of $96 per MT.The contract signing was delayed as the payment terms specified in the tender document which was a Standby letter of Credit for the total quantity of the tender was not adhered to by Litro Gas owing to non-availability of dollars to open the LC.

Then Siam Gas agreed to a Standby LC for $30 million to cover uninterrupted supply of 40,000 MT which Litro Gas could not meet resulting in the contract signing being further delayed.wingto non-availability of dollars Litro Gas again made a request on May 27 for a spot quotation for 15,000 MT for June 2022 delivery.

In the meantime, Siam Gashad 6,600 MT in stock for immediate delivery in June 2022 to meet the local demand along with another 9,900 MT. This information has been suppressed by some Litro Gas officials, official documents divulged.

Gas then offered LitroGas a price of $110 for 40,000 MT for July- August 2022 delivery which has not been considered by Litro Gas since they were very keen to purchase from Omantrading at a higher price.According to official documents pertaining to this deal, the spot purchasing contract was awarded to this Omani company for 100,000 MT of LPG at the higher price of US$ 129 per metric ton after receiving the Cabinet approval.

Litro Chairman Litro –Muditha Peiris has sent a letter to the Siam Gas Trading Pte Ltd on June 23cancelling their offer of US$ 96 per MT which is still valid for acceptance.

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