The Central Bank (CB) is 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 about80 percent of the market and Laugfs Gas, which caters to the remaining
20 percent.
Laugfs Gas is unable to import liquid petroleum (LP) gas due to a lack of dollars in the market making it difficult for the company to open letters of credit (LCs) with its banks, the company’s chairman W K Wegapitya said adding that thy have made a request from all the banks, even Samurdhi banks, to see if they can give us dollars,”
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. “.
Wegapitiya said that the company was supplying around 40,000 to 50,000 gas cylinders per day but now it’s only able to distribute around 10,000 to 15,000 cylinders after the Consumers Affairs Authority (CAA) and Sri Lanka’s Standards Institution (SLSI) increased the requirement of quality checks for gas distributors after a spate of domestic gas cylinder explosions.
