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Monday August 17th, 2026

Sri Lanka’s mysterious gas explosions become nobody’s baby

ECONOMYNEXT – A distressing sight in the village of Waligamuwa in Sri Lanka’s central district of Matale last weekend brought home a sombre truth: that lofty ideals such as accountability are perhaps destined to remain abstract concepts and not much more.

Villagers had gathered to mourn 53-year-old Ashoka Priyangani, a mother of four who’d succumbed to burn injuries from a cooking gas-related explosion in her own kitchen. Her family, friends and neighbours were seen congregated round the coffin, angrily protesting and demanding justice from wherever it might come.

The unsuspecting Priyangani had been trying to cook as usual when an explosion caused her severe burn injuries that would soon prove fatal. Her family had rushed her to Kandy hospital, where she died leaving behind a family of five.

Priyangani’s grieving widower now has but one goal: to take both the government and the gas company to court.

The liquid petroleum (LP) gas explosion that ended Priyangani’s life was no isolated incident. A wave of such explosions, fires and related incidents in the last 48 days has shaken Sri Lankans, a vast majority of whom are already battling worsening crises across multiple fronts.

According to police, nearly 730 incidents have been recorded from November 01 to December 15. Of these, 24 explosions were due to gas leaks directly from the cylinder while the rest were, according to authorities, due to subpar cookers or accessories such as regulators and hoses.

A majority of the incidents were linked to LP gas sold by the state run Litro Gas Lanka Ltd.  Litro maintains a duopoly on cooking gas supply in Sri Lanka with Laugfs Gas (Pvt) Ltd.

“Can’t the government or the Consumer Affairs Authority (CAA) advise the public to stop using gas until they clear this mess up?” news footage showed a relative of Priyangani’s as saying.

Over six weeks after the first explosion, Sri Lanka’s Court of Appeal on Friday (17) ordered the gas companies to recall LP gas cylinders in the market and replace them free of charge with cylinders approved by the Sri Lanka Standards Institute.

The court also ordered that both Litro and Laugfs maintain a mix of 70 percent butane and 30 percent propane in the LP gas cylinders they sell, following unverified speculation that a change in composition was the reason for the explosions.

Experts have hypothesised that increasing the propane content of the cylinder to 50 percent had resulted in high pressure which had led to leaks from the cylinder. However, this has yet to be proven scientifically.

Related: Sri Lanka Court of Appeal orders LP gas companies to recall cylinders: report

The court orders notwithstanding, no one has yet taken responsibility for the series of reported incidents let alone the death. Authorities have also yet to determine the exact cause of the explosions, and, despite the existential threat posed to millions of Sri Lankans, critics claim, no concrete steps appear to have been taken.

Deepening mystery

Glass-topped gas cookers exploding appears to be a fairly common phenomenon in India, Pakistan and some East Asian countries. One theory put forward by some experts is that this is due to the ignition/pilot light firing up – under the glass – as the knob does not come out after fire is reduced or shut down. It is pushed in.

The knob sometimes doesn’t come out due to dirt in the mechanism, but why this is suddenly the case appears to be a mystery. It may be because there was an earlier bad gas stock with oil residues which was brought due to CAA price controls and it clogged up the works, analysts have hypothesised.

If the alleged change in composition change is indeed to blame, analysts say, it is definitely a fallout of the price controls.

Economic interventions leading to wrong incentives for agents has led to unintended consequences as is typical, critics have argued.  However, the gas companies have operated for decades without much trouble, so why now appears to be the biggest question.

Total inaction

Public confusion over the bizarre explosions is rising and frustration over the apparent lack of accountability appears to be setting in the face of alleged government inaction.

A group of ruling Sri Lanka Podujana Peramuna (SLPP) members were seen praying at the Seenigama Dewalaya earlier this week, seeking divine retribution on the gas companies who had “endangered the lives of consumers”. Short of this, no concrete action appears to have been taken, critics say.

The Consumer Affairs Authority (CAA) has also largely remained mum about the explosions though parliament has seen heated arguments over the matter, even as explosions continue in various parts of the country.

“Nobody tells with any clarity about what is really wrong with gas,” SLPP MP Anura Priyadharshana Yapa told the media this week when he was asked to comment. Yapa is now critical of the government.

“If it is in another country, the board of directors (of the gas company) would have been dragged by their ears and arrested. Now they pretend as if they don’t know anything. This will lead the country to anarchy,” he said.

Friday’s Court of Appeal decision saw the gas companies ordered to revert to the earlier 30-percent propane composition and also have the Sri Lanka Standards Institute oversee the quality of gas being distributed in the country.

Critics, however, claim that the damage has already been done.

Already the two gas suppliers have ceased distribution in the market. Many consumers have now switched to kerosene. The demand for kerosene has risen by 100 metric tons in the past two months, the state-run Ceylon Petroleum Corporation (CPC) said.

The LP gas shortage has already hit Sri Lanka’s hotels, restaurants and canteens hard.

Asela Sampath, the chief of the All Island Canteen Owners’ Association (AICOA,) said on Friday that more than 80 percent of canteens and hotels will be closed from Saturday (18) onward as a result.

Meanwhile, an LP gas shipment from Bangladesh had been docked in the Colombo port owing to a quality issue. The government later directed Litro not to buy the consignment as it does not meet the standards. However, on Friday, the Secretary to the Ministry of Technology reportedly granted permission o unload gas after he tested a sample aboard the ship.

Allegations and counter allegations

“We cannot ascribe a monetary value to a life that was lost. We have asked these companies to do justice by them. We will also take part in that,” Consumer Affairs State Minister Lasantha Alagiyawanna told the media this week.

“We are doing our best to solve this matter as quickly as possible.”

Litro, for its part, rejects the government’s allegations. The state-run gas company maintains that it had nothing to do with the recent spate of explosions.

“It’s too early to comment on who will take responsibility for the death as investigations show a completely different result as opposed to a gas explosion. So further investigations are going on,” a Litro official told EconomyNext requesting anonymity as they were not authorized to comment on the matter.

Meanwhile, police confirmed that Priyangani’s death was due to a gas explosion, but noted that investigations are still under way to determine the exact cause of the incident.

“According to hospital reports, the patient had died due to severe burns from the incident. The gas pipe and other [accessories] have been sent to the government analyst for a report,” police said in a statement.

Police also said it was suspected that the end of hose connecting the cylinder to the stove had become loose and a leak had occurred while the stove was already lit. The fire must have gone through the pipe because the gas supply had not been cut off from the regulator, police said.

According to writer and analyst Vinu Wijesekara, Sri Lanka consumes over 440,000 metric tons of LP gas annually. Approximately 42% of the population exclusively uses gas cylinders for domestic purposes while 43% use firewood alongside LP gas and 13-15% of the population exclusively uses firewood, Wijesekara wrote to the privately owned Daily FT in 2018.

Litro controls 80 percent of the market while only other competitor Laughfs controls the rest.

The government has contemplated plans for the CPC to open another state-owned LP gas company, but the plan has been put on hold due to financial constraints of the country, which is facing an increasing risk of sovereign debt defaults.

Legal perspective

“This unfortunate death could have been prevented if the authorities had taken necessary and timely action to monitor the quality of gas cylinders & ensure the safety of consumers,” Human Rights lawyer Bhavani Fonseka told EconomyNext.

“Questions must be asked as to why authorities failed to take action that could have prevented the explosions.”

Fonseka, a government critic, also said relevant officials must be held to account and the affected parties should consider making a police complaint so that an investigation takes place that is the first step pertaining to criminal action against those responsible.

“Additionally, affected parties can also explore filing a case in the Supreme Court in terms of violating their fundamental rights. These are some measures that can be taken to obtain redress and justice for the victims.”

Questions must also be asked pertaining to the regulatory framework governing gas cylinders and why authorities were unable to ensure the safety that is required of such products, she said.

“Recent months have also seen officials formerly with the Consumer Affairs Authority commenting on discrepancies with such entities and the need for urgent reforms. Questions should be asked as to whether such reforms have taken place and the impact on the rights of citizens,” she said.

“It is incumbent on the opposition, civil society and media to keep attention on this issue and insist that there is a thorough investigation and accountability. Public pressure is also required to ensure the state and private actors adhere to quality control standards and that the rights and safety of consumers are given priority,” she added. (Colombo/Dec18/2021)

Reported by Shihar Aneez, Mahadiya Hamza and Chanka Jayasinge

Sri Lanka’s Hemas enters Kenya with $16.2mn stationery firm buy

ECONOMYNEXT – Sri Lanka’s Hemas Holdings, through its subsidiary Atlas Axillia Company, has acquired a 75 percent stake in Twiga Stationers & Printers Limited, a Kenya stationery manufacturer, for 16.2 million dollars.

This is Hemas’ first international acquisition, the company said in stock exchange filing.

“It also positions Hemas with a strong operating platform in Kenya, one of East Africa’s most dynamic consumer markets, with a GDP of over USD 136 billion and a young, growing population of over 54 million.”

Twiga is the owner of well-known stationery and learning brands including “Kasuku”, “CrownBird” and “Envoy”, with regional exports.

“The acquisition strengthens Hemas’ Consumer Brands portfolio and creates meaningful synergies with Atlas Axillia, Sri Lanka’s leading learning brand, particularly in the back-to-school and education-linked consumer segments.”

Hemas stock closed flat at 31.40. (Colombo/Aug17/2026)

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Sri Lanka’s ASPI edges down slightly while blue chips gain

ECONOMYNEXT – Sri Lanka’s Colombo Stock Exchange closed marginally down on Monday, CSE data showed.

The All Share Price Index was down 0.03 percent or 6.29 points at 21,616.88; while the S&P SL20 closed up 0.41 percent, or 24.62 points, at 6,090.34.

Market turnover was 1.89 billion rupees.

Top positive contributors to the ASPI were Sampath Bank (up 1.75 rupees at 141.75), Dialog Axiata (up 90 cents at 48 rupees), Commercial Bank (up 1.25 rupees at 205.75), Melstacorp (up 1.25 rupees at 192) and PickMe (up 3.25 at 163.50 rupees).

Lee Hedge announced a dividend of 2 rupees per voting share. (Colombo/Aug17/2026)

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Fitch affirms Sri Lanka’s Sampath Bank at AA-(lka); Outlook stable

Fitch Ratings – Colombo – 17 Aug 2026: Fitch Ratings has affirmed Sri Lanka-based Sampath Bank PLC’s National Long-Term Rating at ‘AA-(lka)’. The Outlook is Stable. At the same time, Fitch has affirmed Sampath’s outstanding Sri Lankan rupee subordinated debt at ‘A(lka)’.

Key Rating Drivers
Intrinsic Profile Drives Rating: Sampath’s National Long-Term Rating reflects its own financial strength, which is highly influenced by exposure to the sovereign’s weak credit profile (Long-Term Foreign-Currency and Local Currency Issuer Default Rating (IDR) of ‘CCC+’). The rating reflects predominantly domestic operations and direct and indirect sovereign exposure, counterbalanced by a strong domestic franchise as Sri Lanka’s fifth-largest commercial bank.

Sovereign Profile Shapes OE: The sovereign’s weak credit profile continues to drive our assessment of the banks’ operating environment (OE) score of ‘ccc+’. This reflects predominant exposure to the domestic economic environment and large exposure to the sovereign through government securities and lending to the broader public sector, which links the banks closely to the state’s financial health. Fitch expects the OE to remain broadly supportive; however external headwinds may exert pressure on the domestic OE and thereby, sector performance.

Corporate Lending Gaining Traction: Corporate lending, including mid-sized corporates, continued to dominate Sampath’s loan book, representing 53% of total loans at end-2025 and rising further in 1Q26. We expect this shift to continue, as the bank looks to mitigate downside risks stemming from a weaker OE, which is likely to weigh more on retail and SME borrowers. Cross-border lending should remain a key driver of this shift – at least a quarter of incremental corporate loan growth in 2025 and 1Q26.

High Growth Plans: Sampath’s risk profile remains influenced by its exposure to the challenging OE. Government securities holdings accounted for nearly one-third of total assets at end-2025. Loan growth has also remained strong, expanding by 28% in 2025 and a further 11% in 1Q26. The bank intends to sustain this pace, targeting 2026 growth broadly in line with 2025, driven primarily by the corporate and retail segment. Persistent, rapid balance-sheet expansion could pressure loan quality and liquidity, if not held to consistent underwriting standards.

Asset Quality to Weaken: Sampath’s impaired (stage 3) loan ratio improved to 9.3% at end-2025 (end-2024: 13.5%), with the trend sustained into 1Q26 – largely from loan growth, while new defaults rose only modestly. Nevertheless, the ratio remains among the highest of similarly rated private-sector peers, weighed down by SME defaults. Fitch expects credit impairments to increase moderately over the near-to-medium term amid a challenging OE, although rapid loan expansion should lead to further drops in the impaired-loan ratio.

Profitability to Moderate: Sampath’s operating profit/risk weighted assets (RWA) dipped to 4.4% in 1Q26 from 6.5% in 2025, due primarily to credit costs which accounted for 26% of pre-impairment operating profit. We expect profitability to hold steady in 2026-2027, as higher income from loan growth should be offset by narrower margins and higher impairment charges from new lending. Profitability is supported partly by a rising share of non-interest income, mainly fees and commission income: 21% of total operating income in 1Q26 (2025: 19%).

Capital Buffers Narrowing: We expect the common equity Tier-1 (CET1) ratio to continue to decline from 14.0% (including 1Q26 profit) at end-1Q26, reflecting loan growth, dividend payments and mark-to-market losses on the Fair Value Through Other Comprehensive Income (FVOCI) government securities portfolio. We believe RWA growth and valuation losses as interest rates rise will continue to weigh on capital ratios. Any capital support extended to subsidiaries would have a limited impact on overall capital, given the size of likely injections.

Loan Growth Reducing Liquidity: We expect Sampath’s loan/deposit ratio (LDR) to rise further from 82% at end-1Q26(2025: 78%; 2024: 68%), returning to pre-crisis levels, as the bank pursues strong loan growth. This growth has so far been funded largely by deploying excess liquidity alongside moderate deposit growth. Narrower liquidity buffers mean we expect loan growth to become increasingly deposit-funded. We believe access to foreign-currency term funding is showing early signs of improvement, in tandem with reduced sovereign default risk.

Rating Sensitivities
Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade
Sampath’s National Rating is sensitive to a change in the bank’s creditworthiness relative to other Sri Lankan issuers. A downgrade of the National Rating would most likely stem from a deterioration in Sri Lanka’s sovereign rating, through its influence on the banks’ OE.

A deterioration in key credit metrics beyond our base-case expectations relative to peers would also lead to heavier downward pressure on the National Rating, which is driven by its intrinsic financial strength, independent of any sovereign rating changes.

Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade
Sampath’s National Rating is sensitive to a change in its creditworthiness relative to other Sri Lankan issuers. Upside to the National Rating is limited in the near term, due to our assessment of the sovereign rating and OE. That said, an improvement in the sovereign rating may lead to an upgrade of the bank’s National Rating.

OTHER DEBT AND ISSUER RATINGS: KEY RATING DRIVERS
SUBORDINATED DEBT

Sampath’s Basel III-compliant Sri Lankan rupee subordinated debt is rated two notches below the National Long-Term Rating anchor. This reflects Fitch’s baseline notching for loss severity for this type of debt, and our expectation of poor recoveries. There is no additional notching for non-performance risks, as the notes do not incorporate going-concern loss-absorption features.

OTHER DEBT AND ISSUER RATINGS: RATING SENSITIVITIES
The subordinated debt rating will move in tandem with the bank’s National Long-Term Rating.

REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING
The principal sources of information used in the analysis are described in the Applicable Criteria. (Colombo/Aug17/2026)

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Lion Brewery June quarter profit jumps 18-pct to Rs2.81bn

ECONOMYNEXT — Sri Lanka’s Lion Brewery reported a profit of 2.81 billion rupees for the quarter ended 30 June 2026, up 18 percent from June 2025. The group recorded basic earnings of 35.08 rupees per share for the three-month period.

Total revenue for the quarter rose 15 percent to 33.41 billion rupees, compared to 29.01 billion rupees in the corresponding period of the prior year. This top-line performance supported an operating profit of 4.34 billion rupees, which reflected 11 percent growth over the preceding year.

Earnings were significantly bolstered by a shift to a net finance income of 531.14 million rupees. This marks a sharp turnaround from the net finance cost of 22.35 million rupees recorded in the same quarter of 2025.

Total assets reached 74.29 billion rupees as of 30 June 2026, while total equity stood at 43.73 billion rupees. The group reported a net asset value per share of 546.68 rupees, up from 533.02 rupees at the start of the financial year.

During the quarter, the company paid a second interim dividend for the previous financial year totaling 1.83 billion rupees. Investing activities during the period included 1.46 billion rupees for the purchase and construction of property, plant, and equipment.

The company remains compliant with minimum public holding requirements, reporting a public holding percentage of 12.10 percent across 1,860 shareholders. It also maintained a strong capital base, with total equity increasing from 42.64 billion rupees at the beginning of the period. (Colombo/August17/2026)

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Sri Lankan special needs school founder earns top Irish fellowship

ECONOMYNEXT – Anton James, founder of The Tree House International, Sri Lanka’s school for children with special needs, has been elected a Fellow of the Psychological Society of Ireland (PSI).

“This recognition belongs to the educators, therapists and families in Sri Lanka who strive every day for better neurodevelopmental care, and strengthens my resolve to ensure that every child with special needs has access to world class, evidence-based intervention,” said Anton.

The Fellowship is the highest individual distinction awarded by the PSI and is conferred on psychologists who have demonstrated superior psychological knowledge and made outstanding, sustained contributions to psychology.

“Sri Lanka is in the early stages of developing its own national professional body for psychologists, so it is a particular privilege to be recognised by the Psychological Society of Ireland this year, having also been elected a Fellow of the British Psychological Society two years ago.”

“Dr Anton’s extraordinary dedication to behaviour psychology and his transformative impact on special needs education in Sri Lanka embody the exact excellence the PSI Fellowship stands for. His global footprint and clinical leadership enrich our international psychological community,” President of the Irish Psychological Society of Ireland – Sarah Cassidy, said.

Anton is a neurodevelopmental care expert with over 20 years of global experience. (Colombo/Aug17/2026)

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Sri Lanka’s Softlogic Holdings June quarter loss widens 5-pct to Rs2.79bn

ECONOMYNEXT — Sri Lanka’s Softlogic Holdings PLC reported a loss of 2.79 billion rupees for the quarter ended 30 June 2026, a 5 percent increase from June 2025.

The group recorded a basic loss of 2.00 rupees per share for the three-month period. For the year ended March 31, 2026, the group announced a loss of 8.79 billion rupees.

Total revenue for the quarter rose 14 percent to 34.07 billion rupees, supported by performance across key business sectors. Growth was significantly bolstered by a 41 percent increase in revenue from insurance contracts, which reached 12.74 billion rupees.

The retail and telecommunication segment remained a major driver with revenue of 13.21 billion rupees, while financial services and healthcare services added 12.12 billion rupees and 9.72 billion rupees, respectively.

Results from operating activities for the quarter surged 107 percent to reach 4.19 billion rupees. However, the bottom line remained pressured by a 98 percent increase in the change in insurance contract liabilities, which reached 3.83 billion rupees during the period.

Net finance costs for the period rose 19 percent to 1.42 billion rupees, as finance expenses reached 3.90 billion rupees against finance income of 2.49 billion rupees. The group reported a loss before tax of 1.06 billion rupees for the three-month period.

Total assets reached 209.57 billion rupees as of 30 June 2026, while total equity stood at a negative 47.62 billion rupees. Interest-bearing borrowings reached 57.87 billion rupees in non-current liabilities and 22.33 billion rupees in current liabilities.

The group reported a net liability per share of 51.46 rupees at the end of the period. Public shareholding in the company was recorded at 11.22 percent across 10,766 shareholders.

A dispute has arisen with the Department of Inland Revenue regarding the applicability of income tax exemptions for Asiri Surgical Hospital PLC. The management has filed appeals against these assessments in the Court of Appeal and the Supreme Court. (Colombo/August17/2026)

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