Gas price revision required to adjust current retail price in Sri Lanka

LPG retailers in Sri Lanka have been compelled to increase the price of a domestic gas cylinder due to global LPG gas price hikes that has been ongoing since October 2016.

The price of a domestic gas cylinder was increased by Rs. 110 by the Consumer Affairs Authority (CAA) following approval from the Cabinet of ministers based on the recommendation given by the cabinet subcommittee with regard to the cost of living.

The inevitable price increase was a direct result of the incremental price revision by Saudi Aramco, which holds price index known as the Contract Price or CP for Liquid Petroleum Gas (LPG).

However, given the current market pressure which is predicted to increase in the near future, industry leaders commented on the inadequacy of the price hike and called for a sustainable and a pragmatic pricing-formula as practiced in the case of country’s fuel price which is quite transparent.

Increased consumption in the Asian region specifically China, India and Japan, higher purchases by the USA for feed stocks, high consumption in the USA and South America contributed to the global LPG price increase.

While LPG retailers have been reluctant to transfer the pressure of the price hike to consumers and consequently bore the increasing expenses since October 2016, the current market pressure calls for further a price increase and a fairer mechanism to protect both the consumer as well as the retailers.

According to predictions announced at the summit of World LP Gas association in October 2017 had in Morocco, world LPG prices will rise by 20 percent – 25 percent in 2018in comparison to the average price of LPG in 2017.