LAUGFS Gas explains reasons for Rs. 1,775 price increase

LAUGFS Gas PLC Director and Chief Executive Officer Nalinda Kurukulasuriya | Photo enhanced using AI for clarity

LAUGFS Gas PLC says the Rs. 1,775 price increase for a 12.5 kg domestic gas cylinder was necessary to cover rising costs caused by global gas prices, shipping charges, insurance charges and exchange rates, and was not intended to generate additional profits.

LAUGFS Gas PLC Director and Chief Executive Officer Nalinda Kurukulasuriya said the company had calculated the new price only to cover its costs and had no intention of making additional profits or causing hardship to consumers.

Explaining the reasons for the price revision, he said several factors determine the price of a gas cylinder, including the price per metric tonne of gas announced by Saudi Aramco at the beginning of each month.

According to Kurukulasuriya, global gas prices have increased significantly since the beginning of this year due to the war situation, adding Rs. 706 to the cost of a 12.5 kg gas cylinder.

He said shipping and insurance charges for transporting gas have also increased due to the war situation, adding another Rs. 417 per cylinder.

Changes in exchange rates have resulted in an additional cost of Rs. 299 per cylinder.

The price revision also includes Rs. 256 in Value Added Tax (VAT) at a rate of 18%, along with Rs. 90 to cover financing costs incurred by the company when purchasing gas through bank loans and letters of credit (LCs).

Kurukulasuriya said these additional costs had contributed to the company’s decision to increase the price of a 12.5 kg gas cylinder by Rs. 1,775.

He also said that international market conditions and restrictions affecting the company’s Hambantota operations had increased its costs.

He explained that LAUGFS Gas, as a company listed on the Colombo Stock Exchange (CSE), has responsibilities towards its shareholders, banks and other financial institutions that have provided loans to the company.

Therefore, he said, the company cannot continue selling gas at a loss.

The Chief Executive Officer reiterated that the latest price revision was not aimed at increasing profits but was necessary to cover rising costs, particularly those caused by the impact of the war situation on the global market.