COLOMBO : The decision to increase LAUGFS Gas prices was made to offset rising costs resulting from increases in global gas prices, freight charges, insurance premiums, and exchange rate fluctuations, according to the company’s Director and Chief Executive Officer, Nalinda Kurukulasooriya.
He emphasised that the company does not expect to generate any additional profit from this price revision, stating that it is solely an adjustment to recover increased operational costs.
Explaining the key factors that determine the price of a gas cylinder, Kurukulasooriya noted that the monthly metric tonne gas price announced by Saudi Aramco at the beginning of each month is one of the primary determinants.
He explained that global gas prices have increased significantly due to the ongoing war since the beginning of this year, adding an additional cost of Rs. 706 to a 12.5 kg gas cylinder.
Furthermore, freight and insurance charges associated with transporting gas have also increased due to the prevailing war situation, contributing an additional Rs. 417 per cylinder. The CEO added that fluctuations in the exchange rate had resulted in a further cost increase of Rs. 299 per cylinder.
In addition to these direct cost increases, Kurukulasooriya explained that the price revision also accounts for Rs. 256 in Value Added Tax (VAT) at the rate of 18%, as well as Rs. 90 in financial costs incurred by the company when purchasing gas through bank loans and Letters of Credit (LCs).
Accordingly, although the cumulative increase in costs amounted to Rs. 1,769 per cylinder, the company increased the price of a cylinder by Rs. 1,775.
Kurukulasooriya reiterated that the price revision was neither intended to generate additional profits nor to place an unnecessary burden on consumers. He stated that, as a company listed on the Colombo Stock Exchange, LAUGFS Gas is accountable to its shareholders, as well as to the banks and financial institutions that have provided financing. Therefore, the company cannot continue selling gas at a loss.
He concluded that the latest price increase is purely a cost-recovery measure necessitated by external factors, particularly rising costs in the global market amid the prevailing war situation.
