Authority undecided over gas price issue

As the two companies which control the country's LPG market continue to put pressure on the Government the Consumer Affairs Authority (CAA) said yesterday that it has not consented to a gas price increase.

However, the two gas companies said that they will have to seriously consider whether to continue with their businesses unless a favourable response was given by the government.

"The government should allow us to increase the price or provide us some form of concession if we are to continue with our business," Laugfs Holding's Chairman W.K. Wegapitiya told the Daily News. It was earlier reported a Shell Gas Lanka Ltd. official too said that the company would be compelled to discontinue its LPG business if the government would not allow a price increase.

The Chairman of the CAA Sarath Wijesinghe told the Daily News yesterday that the authority is has closely studied the representations made by the two companies but are yet to make a decision on the matter. "While protecting the consumer we also have to look into the difficulties of the industry.

However, subsidising the domestic gas industry is a matter which is in the hands of the government," Wijesinghe said. The two companies said that a price increase is unavoidable due to surging gas prices in the international market.

Meanwhile, there are complaints that the two gas companies although increase gas prices according to fluctuations in the international market they do not pass on the benefit of the reduced world market price.

A former official of the Fair Trading Authority (later replaced by CAA) told the Daily News that the Commission had to direct Shell Gas Lanka Ltd in 2003 to reduce its selling price of gas by Rs.45.

"There were also attempts by some other companies to enter the local LPG market. It would have open the market for more competition. When Laugfs Gas entered the market in 2001 there was optimism that the competition would lead to reasonable prices for consumers, but it has not happened," the official said.

He said the Fair Trading Commission had also declared earlier that Shell Gas Lanka Limited (SGLL) which held a monopoly in the LP Gas market in Sri Lanka had been using its position in a manner that restricts the consumers' choice and the competition, thereby operating against public interest.