Gas shortage could have been averted – Litro Chairman

• New shipments were not ordered
• Gas queues expected to end this month
• Sufficient stocks ordered till October
• No issue with composition in gas

A serious shortage of fuel, gas and other essential items as a result of the dollar crisis led to protests being staged around the country over the past few months.
However, the Chairman of Litro Gas Lanka Ltd, Muditha Peiris says the shortage of domestic gas in the market could have been averted.
In an interview with Daily Mirror conducted last week, Muditha Peiris said that the past administration of Litro had failed to take steps to prevent a crisis in the market.
He also said that he was confident the shortage of domestic gas in the market will come to an end by the end of July.
Excerpts of the interview:

Q  What is the status quo with regards to domestic gas in the market today?

We have already received about 4 shipments. Three shipments of over 3700 MT each. We have issued over 600,000 cylinders to the market. Of that, around 90 percent are 12.5 KG cylinders. We have another shipment in Kerawalapitiya. There are another 6-7 shipments scheduled to arrive during July. Up to 31st July, we have ordered approximately 33,000 MT of gas. So we are very confident we will be able to get rid of all the gas queues by 31st of July.

Q  What is the demand for gas in Sri Lanka? 

Per month it is approximately 25,000. Sometimes it goes up to around 28,000. But it is always around the 25,000 and 28,000 range.

Q  Could the shortage of gas in the market have been averted? Could steps have been taken to avoid this crisis, in your opinion?

Yes, it could have been easily prevented much earlier. When I took office on 15th June not a single shipment was ordered. So, the challenge was to schedule shipments and get the suppliers on board again. The other challenge was to get funds from the World Bank which we have now successfully managed to do.
So, I can confidently say that we have secured the supplies or supply lines for the next 4 months. We will have sufficient LPG gas until the end of October. The dollar shortage in the country will not impact Litro gas till the end of October.

Q  So after October, this issue might arise again? 

We are trying to sort this out at least until the next 1 ½ years. We are trying to float the next Term Tender. With that, we are trying to secure the supplies for the next one year or 18 months. So I am sure that will give us enough security and stocks for the next 1 ½ years.     

Q  Did past chairmen or the management fail to pre-plan resulting in this crisis with gas?

They had not taken appropriate steps at the right time. We have a good team at Litro Gas but the right steps were not taken at the right time to prevent this. That is why we are facing this gas shortage.
I was here from 2015 to 2020 as the Managing Director and Chief Executive Officer and these issues were not there then.

Q  How much support and financial backing does Litro depend on from the Government to ensure the operations run smoothly?

Nothing at all. We have our funds. We don’t depend on the Treasury. But just before I took over, the company had sought around Rs. 6 billion from the Bank of Ceylon but other than that we always depend on our funds.

Q  There was an issue over the quality of the gas or the composition of the gas. Is that issue now resolved?

At Litro Gas I can say there was never an issue with the gas composition. The gas is certified by world-recognized bodies. The Police reports and some of the labs here had also cleared it. So it had nothing to do with the gas composition. It could be with the low-quality hose and tubes or regulators. We cannot take responsibility for that.

Q  There had been concerns over financial mismanagement during the previous management of Litro. Is that something you are looking into? To ensure accountability. 

This was all related to one particular supplier, Siamgas in Thailand. (COPE had recommended that an investigation be conducted on the cancellation of the Term Tender, which had been approved by the Cabinet to buy gas from Siamgas). Litro, before I took office, had requested 15,000 MT of gas which is sufficient for half a month but they confirmed only 6600 MT. That is enough for only around 5-6 days. So, we had to go to another supplier. Cabinet appointed a committee to assess the situation. The committee found that the current supplier has the best capacity. I believe we have taken the right decision on picking the current supplier purely based on the capacity it can deliver. I don’t think the Thailand-based supplier could ensure sufficient stocks in the country.

Q  You have taken over at a very challenging time. The past chairmen had to step down or were replaced. Why did the Government pick you?

Well, I think it was mainly because I led Litro Gas and Litro Terminals from 2015-2020. Under my leadership, we paid Rs. 11 billion to the Treasury. We also introduced over 1 million new customers. When I started in 2015 the market share was around 69 percent. I managed to increase it to 78 percent. 1 percent is equal to around 250,000 new cylinders. I think these were the main reasons the pollical leadership chose me.

Q  With the crisis, I am sure Litro would have faced financial difficulties.

We are in the stage of recovering. When I left the company in January 2020 there was around Rs. 21 billion in our fixed deposit but today we have borrowed about Rs. 8 billion after spending what we had. But with the current situation, the Government has allowed us to increase the price of gas. So with that, we are in a manageable status and are recovering.

Q  There have been some questions raised about the pricing of gas. Is it a fair pricing system?

The pricing system was not fair earlier but recently we introduced a pricing formula with the help of the Finance Ministry. So, we increase or decrease the price based on the pricing formula. We have some information that the world prices may go down and if so we will be able to reduce the price locally as well either next month or the month after.