New entrants close shop leaving consumers:

Laugfs calls for proper entry mechanism

Anjana Samarasinghe

Laugfs Gas Chairman called on the Government to have a proper entry mechanism for new players who enter the gasoline business.

Chairman of Laugfs Holdings Limited W. K.H Wegapitiya said there should be more players in the industry but new players who enter the market recently could not survive in the market.

“Due to these fly-by-night players many consumers faced difficulties,” he told a media briefing yesterday.

“There were two companies who entered the market recently saying they could provide LPG at a cheaper price but these companies failed to sustain in the business.

“There are no entry barriers in the industry.

“The Government and the authorities need to make sure that these new entrants have continuous supply sources to operate in the business,” he said.

“New entrants need to have minimum infrastructure such as storage facilities, minimum number of cylinders, ship loads and bowsers before they enter the market.

“The Government has to focus on these issues for sustainability of new companies and for consumer protection,” he said.

Meanwhile, Laugfs Gas announced a price revision of a domestic LPG cylinder with effect from today. Wegapitiya said the new price of a domestic LPG cylinder will be Rs. 1465.

“We entered into an agreement with the Consumer Affairs Authority (CAA) for a “Formula Pricing Mechanism” last year as a result of a court ruling to make our business viable.

“The new price revision has been done according to this pricing formula mechanism.’

“This is an important parity price mechanism where consumers will have the benefit of enjoying a price reduction. International gas prices, exchange rates, total product cost, port authority levy, total landed cost are some basic elements of the pricing formula.

On the gas prices, Wegapitiya said during the winter season gas prices peak high. In summer prices come down. However the highest gas price was recorded last year and there was a sudden price hike last year.

We predict that gas prices may come down in March where the company could pass on benefits for its customers, he said.

“The Government has already provided tax concessions for LPG imports and nearly 30 per cent of the population is consuming LPG gas in Sri Lanka.

Laugfs will be investing US$ 20 million on a storage facility in Galle and construction work on the project is scheduled to be completed within two years. This will help the company to reduce the total cost and increase the storage capacity.