Home » LPG procurement incurs over Rs. 1 billion loss amid economic crisis

LPG procurement incurs over Rs. 1 billion loss amid economic crisis


By: Staff Writer

January 14, Colombo (LNW): The recent controversial LP Gas deal tainted with irregularities have been unearthed by the Auditor General on the directions issued by the Committee on Public Enterprises (COPE).

It has suggested in 2022 that an investigation be conducted by the Auditor General’s Department on the cancellation of the term tender given to purchase LP gas from Siam Gas at US$ 96 per metric ton and opting to buy 100,000 MT of gas at a cost of $129 per metric ton from an Oman company OQ Trading.

New startling revelation has come to light jolting committee members at the COPE meeting that Former Finance Minister Basil Rajapaksa was behind the sudden cancellation of the long-term tender with Oman’s OQ Company in February, 2022, which has resulted in the liquefied petroleum gas (LPG) shortage in the market.

“A long-term tender was signed in 2020 with the OQ Company to supply LPG till 2023.

However, on October 06 2021, Former Finance Minister Basil Rajapaksa held a discussion with all the relevant officials to cancel the agreement in February, 2022, official sources revealed.

Amidst the economic crisis, Sri Lanka has incurred a substantial additional expenditure of $ 3.146 million, equivalent to Rs. 1.139 billion, due to the cancellation of the term tender initially awarded to Siam Gas Trading Ltd. for the procurement of Liquefied Petroleum Gas (LPG).

The recently-issued Special Report on LPG procurement by Litro Gas Lanka Ltd. (LGLL) for the year 2022/2023, by the National Audit Office (NAO), reveals that this unexpected financial setback has led to the purchase of gas from OQ Trading Ltd. at a higher cost.

The report issued on 11 December 2023 reveals that Siam Gas Trading, the lowest bidder, had been recommended by the Technical Evaluation Committee (TEC) on 26 April 2022 as the qualified supplier for 2022-2023.

The Procurement Committee had approved this recommendation on 28 April 2022.

Additionally, Cabinet approval had been granted on 4 May 2022 to select Siam Gas Trading as the supplier.

Despite the Board of Appeal’s consent on 28 May 2022 to award the procurement to OQ Trading as outlined in the report, it was revealed by the NAO that a new procurement process had been initiated following a Cabinet decision on 13 June 2022.

This decision had been made despite gas being purchased from OQ Trading at a price exceeding that of Siam Gas Trading (CP+$ 96).

Notably, this had occurred without a formal methodology for Sri Lanka to purchase gas from March 2022.

As a result, the term procurement had been cancelled, even though Siam Gas Trading had been selected. Gas had then been purchased from OQ Trading at a higher price.

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