Imminent crisis in gas distribution, say LP gas distributors | Sunday Observer

Imminent crisis in gas distribution, say LP gas distributors

Distribution is a 365-day operation
Distribution is a 365-day operation

Keeping your home fires burning would soon be left in the hands of a distributor of an essential utility without which the entire life chain could be crippled posing a potential threat to the economy of the country.

One would not realise how important it is to have the gas cookers lit up for the preparation of meals until the energy filled cylinder lying in a corner of the kitchen is empty. How many households or establishments would be affected if the distribution network is disrupted will be an unsolved riddle.

The LP Gas Distributors Association of Sri Lanka (LPGDASL), a body catering to the welfare of 35 distributors in a hurriedly arranged media briefing in Colombo last week warned of an impending crisis distributors would face soon if their grievances go unheeded.

Distributors compared their situation as falling from the frying pan to the fire, being whacked by the escalating world market gas prices and the dwindling value of Sri Lanka’s currency, which the Association called a double whammy given the predicament the distributors are in.

LPGDASL President Sathyendra Wijayapura said the members had maintained silence all this while since it did not want to take to streets and agitate for a fair channel margin as trade unions do. Even if we wanted to we cannot resort to such tactics as distribution is a 365-day operation.

“Any disruption in distribution would have many ripples on the economy and that’s the reason we decided to use the proper and effective mode of communication which is the media to express our difficulties,” Wijayapura said. The distribution of gas cylinders commenced with the privatisation of LPG business in 1996.

A spokesman for the distributors said despite the many obstacles faced by members during the past 22 years they had stomached all the challenges to ensure an uninterrupted supply of gas.

“We have no intention of passing on the burden on consumers by urging the authorities to raise the price of a domestic gas cylinder. What we have been clamouring is for a fair channel margin so that distributors could wade through high gas prices, currency devaluation and increase in overhead costs,” he said.

The increase in transportation and related overheads stemming from the upward revision in the price of diesel to Rs. 123, the increase in vehicle spare parts and labour wages, repayment of loans, increase in staff salaries, lease installments on vehicles and regular staff training are some of the pressing issued faced by distributors.

LPGDASL has been requesting that the present channel margin for distributors and dealers which has not been revised since 2007 and the present transportation margin which was marginally revised in 2012 be revised to meet the current economic conditions in the country. Distributors are calling for a reasonable increase in the channel margin to 12 percent with 7.5 percent for distributors and 4.5 percent for dealers and the transport margin to be revised to Rs. 7 per km within the Colombo district and an adequate percentage for other districts.

Distributors said their industry is a capital intensive industry which required trained workers to ensure the maintenance of high safety standards.

“Truck drivers and loaders are provided training once in six months to ensure adherence to safety standards. A 10-wheel truck transports around 1068 gas cylinders. One could imagine the extent of damage an explosion could cause. This is why it is a specialized job that needs trained workers,” Wijayapura said.

Distributors use a fleet of 600 six-wheel, 10-wheel and prime mover trucks for transportation which are loaded and unloaded eight times up to the point it reaches the dealer.. and would not be able to continue the distribution business for long as they are not in a position to service loans.

LPG (Liquid Petroleum Gas) is the most popular, convenient and economical energy source sued by over 5.5 million households in Sri Lanka. Litro Gas enjoys over 7.3 percent of the market accounting for around 4.25 million households backed by its state of the art storage and filling plant at Kerawalapitiya.

According to Wijayapura, the LPGDASL had written two letters to the Consumer Affairs Authority (CAA), the regulator and requested a meeting with the Ministries of Industry and Commerce and Development Strategies and International Trade but to no avail.

When contacted, Litro Gas Director Marketing and Corporate Affairs Chaminda Ediriwickrama said Litro Gas had submitted proposals to the CAA for an industry pricing formula and added that the proposals are being studied by the regulator.

“We expect the regulator to understand the issue from a business point of view and provide a pricing formula for the industry,” he said. 

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