ECONOMYNEXT – Sri Lanka’s Laugfs Gas, a publicly traded liquefied petroleum gas distributor said it lost 455 million rupees amid price controls and higher interest costs, but was hopeful of market pricing soon.
The reported losses of 1.18 rupees per share in interim accounts filed with the Colombo Stock Exchange.
Laugfs said revenues rose 32 percent to 5.1 billion rupees and expenses rose 48 percent to 4.3 billion rupees, and gross profits fell 18 percent to 782 million rupees.
In the March quarter gross profits were 683 million rupees.
In March 2017 the Saudi Aramco benchmark price for Butane rose to 600 dollars a tonne from 320 a year earlier and propane rose to 480 from 290 dollars a tonne, but market prices were not changed amid new price controls imposed by the current administration. There is a court-ordered formula to market-price LP gas.
But May, June and July benchmark contract prices plunged. By July, butane was at 365 dollar a tonne and propane at 345 a tonne. It is not clear whether the firm is buying forward.
Interest costs at Laugfs rose 116 percent from a year earlier to 534 million rupees. Long term loans rose from 8.9 billion rupees to 16.0 billion over the past 12 months.
"Whilst investments made in some areas such as Renewable Energy sector are already yielding profits, certain other long term investments will be of longer gestation periods," Laugfs Chairman W K H Wagapitiya told shareholders.
In August butane jumped to 460 dollars again and propane to 420. Liquefied petroleum gas is about 70 percent butane.
"…[T]he Company is in a continuous dialogue with the relevant regulatory authorities in order to ensure that LPG retail prices are in line with global LPG market prices, so that the Company’s main source of revenue is secured," Wagapitiya said.
"We are confident that we will receive a positive response in this regard very soon."
He said group was also seeking strategic partnerships to generate funds to create marketing channels and opportunities.
Laugfs also distributes gas in Bangladesh. (Colombo/Aug16/2017)