Speculation over Litro gas tender controversy

COLOMBO (News 1st); There is no end in sight for the gas queues across the country, yet the two gas companies in Sri Lanka continue to insist there will be a steady supply of cylinders to the market.

Amidst these issues, a controversy stems from a suspicious process to import 280,000 metric tons of LP gas by Litro, the state gas company, for a period of 12 months in 2022 and 2023.

Social Activist Nagananda Kodithuwakku points out that Litro Gas had called for tenders to supply 280,000 gas cylinders to Sri Lanka, to which the deadline was 16th March 2022.

According to him, Oman Trading had placed the main bid, however Siam Gas had placed the lowest bid, by quoting 96 US dollars in charges for each metric ton. Kodituwakku stated that the the Government then decided to award the tender to Siam Gas, which was approved by President Gotabaya Rajapaksa's cabinet. However, then rose the greed for commissions.

He said that the Government instead had turned to the other company, and instead of awarding the tender for the company which quoted 96 US dollars, the Government gave it to Oman Trading company for 129 US dollars.

"How many dollars will we lose on each ton? They earn 33 US dollars as commissions. They are looting billions eventually," Kodituwakku said.

Litro Gas Lanka Limited, the government-run gas company, had called for tenders to supply gas for 12 months to Sri Lanka. Three foreign companies submitted their bids out of which the cheapest was from Singapore's Siam Gas Company.

Sri Lanka imports gas from suppliers at the benchmark contract price of Saudi oil giant Aramco, and the contract price is about 750 US dollars for a metric ton of gas.

The Government usually awards tenders to a foreign supplier after considering their additional charges, and Singapore's Siam Gas agreed to supply gas by charging 96 US dollars for freight and insurance, in addition to the contract price. However, Oman Trading had placed a bid to sell gas by charging 129 US dollars, freight and insurance inclusive.

Singapore's Siam Gas company was therefore the cheaper option.

The cabinet's procurement committee had agreed on the Finance Ministry's proposal to award the tender to Siam Gas Company. But this decision was suspended after the appointment of the new Prime Minister.

Muditha Peiris, the Chairman of Litro Gas Lanka Ltd stated that the price quoted by Siam Gas Company is for 6000 metric tons. Yet the company in Oman, has one of their gas shipments in Maldives, and they agreed to supply gas to Sri Lanka for four months through that shipment.

However, the company had wanted Sri Lanka to purchase 100,000 metric tons, at 129 US dollars in additional charges for each ton, according to Peiris.

"The gas company that was chosen had only agreed to supply 6,600 metric tons. So the Cabinet had taken into account the gas demand and the crisis, and award the tender to the Oman company for 100,000 metric tons," he said.

This tender process is surrounded in controversy, despite the Litro Chairman's words.

Oman Trading once held a tender to supply gas on a long term to Sri Lanka, which expired on January 9th.

Did this supplier assist Sri Lanka as gas explosions and a shortage which burdened the people?

Sri Lanka had to make spot payments for each gas shipment, during the last stages of the long-term contract. This payment system continues until today, with most purchases being made from Oman Trading. Yet, should the Government award tenders that do not provide relief to the people through any means?

Litro Gas Lanka Ltd. had called for tenders to supply 280,000 metric tons of gas for an year. In that case, why were short term purchases made? These questions are left to be answered by those in responsible positions.

Four Chairmen were appointed to Litro Gas Lanka Limited between December 2019 and June 2022, which is a testament to the grave crisis the country is facing.

The Ceylon Today newspaper carried a news report today, quoting Eng. Vijitha Herath, the former chairman of Litro Gas Lanka Limited.

The quote reads;

"The process of importing gas from Siam Gas has already commenced. But it seems that there are some internal disputes relating to it, which is why I resigned. The cabinet had approved the procurement of LP gas from Siam Gas for a period of one year. However, the new Litro Chairman has planned otherwise".

Do these incidents reflect opportunities missed by Sri Lanka to sell gas at low rates, purely due to internal deals? 

Decisions made by certain officials cost Sri Lanka an extra 33 US dollars for each metric ton of gas, which leads to the question, are the officials sensitive to the people's needs?