The Sri Lankan government has reached a decision to withdraw from a joint memo presented to the cabinet of ministers to acquire 40 percent stake in Laugfs Terminal Limited, a fully owned subsidiary of Laugfs Gas PLC.
The state-owned Litro Gas commands over 70 percent share in the country’s duopoly LPG market while Laugfs Gas serves the remainder of the market. Laugfs Gas commissioned the largest storage terminal in May 2019, with an investment of Rs.11.9 billion, mostly financed through borrowings.
The minister of finance jointly with the minister of trade earlier submitted a cabinet memo to acquire 40 percent stake in Laugfs Terminal, which owns and operates a LPG storage terminal in Hambantota port to jointly procure LP Gas with a view to maintain LPG prices at current levels through possible cost benefits.
Recently, in a stock market disclosure, Laugfs Gas said: “In consideration of the existing excess storage capacity of the LPG terminal located at the Hambantota International Port, owned by Laugfs Terminals Limited, which is a subsidiary of Laugfs Gas PLC, the government has recognised the possible cost benefits to the country derived from the economies of the scale of operations, by way of joint procurement of LP Gas through the formation of a private public partnership between State owned Litro Gas Lanka Limited and Laugfs Terminal Limited.”
The cabinet of ministers pointed out that it’s not viable to retain the current LPG prices under the current market environment where LPG prices are on a rising trend at the cabinet meeting held on 17th of last month. Concerns over supply risks in procuring LPG from the same source were also raised.
The cabinet paper included a proposal to remove port and airport levy to maintain current market price on 12.5 kg LPG cylinder. Consequently, all seven proposals presented in the cabinet paper are expected to be withdrawn through a note to the cabinet of ministers.
For more information visit www.laugfs.lk
