ECONOMYNEXT - Sri Lanka's Laugfs Gas called for a fair and transparent pricing mechanism for liquefied petroleum gas, after a suffering losses when a court ordered price formula was abandoned in 2015, and prices were re-politicized.
Recently a price increase was allowed by the Consumer Affairs Authority, on top of one allowed earlier, though benchmark prices of propane and butane, the main raw materials for cooking gas, have moved up and down over the past two years.
“On the long term, there will continue to be global price volatility and other macro-economic factors, which are largely unpredictable, affecting the local LPG Industry," Managing Director Tilak de Silva said in a statement.
"Therefore, we believe a fair and effective pricing formula based on key indicators would help address this situation, where consumers would be able to enjoy price benefits arising from decreasing market prices, while ensuring sustainability of the local LPG industry during times of rising world prices.
"This will provide a transparent, impartial and fair mechanism to determine the local LPG retail price in the long run."
Sri Lanka re-politicized LGP prices in 2015 after a new administration came and then Finance Minister Ravi Karunanayake ordered price cuts outside the formula, and made it a political problem for ruling parties to hike prices.
Laugfs group chairman W K H Wegapitiya said world steel prices have also gone up pushing up the cost of cylinders.
The rupee also collapsed in 2015 and 2016 due to a balance of payments crisis triggered by massive printing of money.
In 2017 the rupee was artificially forced down to target a real effective exchange rate index further undermining the currency and lowering living standards.
The central bank cut rates in April amid a pick-up in private credit and injected tens of billions of rupees into the banking system and the rupee is sliding again.
Analysts and economists have called for reform of the central bank, restraining its trigger happy domestic operations department or abolishing it altogether in favour of a currency board. (Colombo/May17/2018)