Silver lining for Shell gas users

by Lalin FERNANDOPULLE

[email protected]
 

Shell will reduce its LPG prices in January if global oil prices continue to slump during the next few months of the year, said Finance Director and Country Controller, Shell Gas LTd., Rimoe Saldin during a media tour to the Kerawalapitiya Main Terminal.

"The decrease in Saudi contract prices during August and September will be reflected in our price application for November. The price application will take into account the current freight rate", Saldin said.

He said the sales volume of the LPG industry dropped by around 10-15 per cent during the past six months due to the volatile global market conditions and the financial market crisis in the United States.

The Saudi Aramco Contract Prices (CPs) for LP Gas have been increasing rapidly since last year, except for a minor decline in February and March of which the benefits were passed on to the consumers in May this year.

LP Gas prices are set according to the price formula agreed upon with the Consumer Affairs Authority (CAA) in October last year. According to the mechanism Shell could apply for a price revision only once in two months.

"The CAA takes thirty days to determine the price and as a result of the time lag the company has to bear the import cost.

Shell was not given the full freight increase in the price determination by the CAA and has been forced to bear the cost since last December", Saldin said.

Shell Gas Lanka Ltd. will increase the number of sales outlets in line with its commitment to provide an uninterrupted service to the country.

"The company operates 1,750 sales outlets in the country and hopes to increase it to around 1,950. The fluctuating global Liquid Petroleum Gas (LPG) prices are a hindrance to expand operations", he said.

The company has to pay US$ 14,000 as demurrage for going beyond the stipulated time to fill its terminals.

The time given to unload gas from the ship has been restricted due to security reasons.

When asked what steps the company had taken to ensure the quality and exact weight of a LPG cylinder, he said that the weight and quality is monitored and that there is no room for low quality and underweight cylinders to be in the market.

Weighing machines have been installed in all outlets where customers could weigh the cylinder and reject if it is below the stipulated weight.

Shell's investment in LP Gas infrastructure in Sri Lanka is around US$ 125 million and it has a 9,000 mt storage capacity and an offshore import facility connected to the main terminal with a five kilometre submarine pipeline.

The company has over two million cylinders in the market and currently accounts for nearly 80 per cent of the country's demand for LP Gas.

Shell has introduced an improved customer seal in its 2.3Kg, 12.5kg and 37.5kg LP Gas cylinders.

The new seal which covers the valve and cap of the cylinder is designed to enhance protection against tampering by unscrupulous parties.