Sri Lanka LGP distributors should return favour given during Covid-19 crisis: Basil
ECONOMYNEXT – Sri Lanka’s liquefied gas distributors should return the favour given by the government of allowing them to keep prices high amid low world prices during a Coronavirus crisis by not raising prices now, Presidential Advisor Basil Rajapaksa has said.
Trade Minister Bandula Gunewardene had told an economic review meeting at Prime Minister Mahinda Rajapaksa’s residence that gas distributors had requested a price hike as world prices are rising, a statement said.
During the Covid-19 period the firms had benefited when world prices fell and now the firms should support the government by holding prices, Rajapaksa had said.
Prime Minister Mahinda Rajapaksa had also said there was no need to raise LPG prices considering the upcoming festival season.
LPG is distributed by privately owned Laugfs Gas and state-run Litro Gas.
Sri Lanka does not have free market pricing based on competition between the two firms based on procurement efficiencies.
Instead LPG is supposed to be priced according to a monthly cost based formula administered by the Consumer Affairs Authority, which however is affected by political considerations.
The Saudi Arabian Aramco contract price for Propane was 350 dollars a tonne in June 2020, and Butane was 330 dollars.
In February 2021, propane set at 605 dollar a metric tonne up 55 US dollars while butane also rose by 55 dollars to 585 dollars a tonne.
In March the propane contract was set at 625 dollars up 20 dollars and Butane 595 up 10 dollars.
Global commodity prices are rising as the dollar weakens amid money printing by the Federal Reserve.
Economists have warned that conditions are ripe for a commodity super cycle. (Colombo/Mar18/2021)