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| Sunday, 13 February 2005 |
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Shell Gas awaits approval for price hike Shell Gas has sought another price hike and is awaiting approval from the Consumer Affairs Authority (CAA), its Managing Director/Country Chairman Hassan Madani said. "Shell Gas is subsidising consumers in Sri Lanka. In other countries, we are allowed to make a margin, but in Sri Lanka the company is not permitted to raise prices in conformity with global fluctuations," Madani said. He said that the mounting losses suffered by the company were so great that they had wiped out all the company's profits, Shell Gas Chief told the Stakeholders' Forum."It is not a healthy situation for business if this situation continues," he said. "The price of LP gas will be increased either by the end of this month or early March, if the CAA sanctions the revision sought," Director Corporate Affairs-Shell Gas Dr. Mahesha Ranasoma said. Under the agreement with the government, LPG is priced according to a formula which is reviewed every two months, but it takes an additional month as the CAA gives its determination within 30 days, he said. Dr. Ranasoma said that an LPG domestic cylinder should be priced at Rs 900 for the company to overcome its losses and get back on track. The present price is Rs. 789. The government grants a subsidy but Rs. 145 million is outstanding for 2004. The total subsidy given by the government is Rs. 197 million. Refusal to grant price revisions led to the accumulated losses, he said. Dr. Ranasoma said that the appreciation of the rupee against the US dollar will benefit the country with the passage of time as the pricing formula also takes into account taxes and the exchange rate. "The challenge we are facing now is how to get out of this situation and make Shell gas a profitable venture," he said. With a Rs. 6 billion turnover the company suffered a staggering loss of Rs. 350 million in 2003/04, compared to Rs. 26 million in 2003. A tonne of LPG in 2003 was on an average US$ 291, but though prices fluctuated together with crude oil in 2004 the product cost per tonne of LPG was as high as US$ 352, Dr. Ranasoma added. "The projection is that LPG will on an average remain at US$ 370 per tonne. Our pricing is still based on the US$ 340 level. |
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