Government moves to import gas to combat a possible shortage, expected within the next fortnight, was yesterday criticized by the Laufgs Gas Company as being ineffective and insisted, price reduction was impossible as ?cheaper LPG imports is a myth.?
Fuelled by reports that Shell Gas Company had curtailed gas imports, because the Consumer Affairs Authority (CAA) refused a price increase, fears of a gas shortage has taken root. In response, Trade, Commerce and Consumer Affairs Minister Jeyaraj Fernandopulle has instructed the CAA to compile a report on the feasibility of importing gas. The report is scheduled to be handed over to the Minister this week. He has also ruled out the possibility of giving a subsidy as requested by the companies.
However, Laugfs Gas Chairman W.K.H. Wegapitiya told the Daily Mirror that low cost LPG was not available in any other country, thus making it impossible to import cheaper gas. He maintained that the astronomical price hike to US$ 585 a metric tonne in the world market, made local price hikes a necessity that both gas companies would not be able to avoid, without incurring massive losses. Analysts have predicted that global LPG prices might hit US$ 600 a metric tonne, next month.
?If this continues, the industry will collapse. Politicians think that importing gas is like importing onions or potatoes. The idea of cheaper LPG imports is a myth. Nowhere else in the world can we find cheaper gas than what is available in the world market. Once they try to, they will understand the difficulties of this foolhardy venture. Governments of many other Asian countries have intervened and provided a subsidy to ease the burden on the consumer and the trader. We prefer that the Government not get involved at all, but since they have already brought gas under price control they have a responsibility to provide relief. If not, then remove LPG from the CAA list of essential goods and let us raise prices,? he said.
Mr. Wegapitiya added that politicians should realize that factors contributing to price increases cannot be controlled, and once they experience the hardships, would appreciate the problems facing gas companies. He pointed out that if the Government is so keen to give relief to the consumer, they can do so with 49% of Shell Gas, which is still owned by the Government. Questioning as to why it was sold in the first place, he also gave the Mundo Gas Company as an example that failed. The Chairman stated that there would be no shortage of supply from Laugfs, despite the Company dealing with the same issues as multinational Shell. The next shipment due on January 22, assures no disruption in supply for the immediate future.
Meanwhile, Minister Fernandopulle accused gas companies of ?playing a double game?, but was unable to explain details of how exactly to prevent a price increase and safeguard the industry. While waiting for the feasibility report on gas imports, he is also considering other alternatives, which he refused to comment upon.
The Minister ruled out the possibility of giving a subsidy, saying ?The companies earlier wanted us to take off the VAT, so that prices would remain steady. But even after we did that, they still continued to increase. So, even if we extend a subsidy to them now, it will not prevent them from raising prices.? Further questioning revealed that, so far, details of gas imports, including country of origin, projected expenses and how to find funds, have not been discussed.