June 20, Colombo: Litro Gas Lanka Ltd has issued a statement clarifying the truth behind the Freight Costs pertaining to the 280,000 MT International LPG Tender for the period 2022-23.
Litro Gas Lanka has called for international tenders for the supply of LPG during the Period 2022-2023 and three companies - Siam Trading, Oman Trading and BB Energy Limited had submitted bids to supply LP gas to the country.
Cabinet approval has been granted to enter into an agreement with O Q Trading Company as a temporary supplier of gas to Litro ending the contract of the lowest bidder Siam Trading Company, which was earlier named by the Ministry Procurement Committee.
Out of the three Siam Trading Company was the lowest bidder with a Freight Cost per metric ton at the rate of USS 96.00 while O Q Trading was the next with a rate of US$129.00 per metric ton.
Therefore, the Standing Cabinet Appointed Procurement Committee (SCAPC) decided to award the tender to Siam Gas Trading.
However, according to Litro, Siam Gas Trading had requested a US $ 30 million letter of credit before starting the gas supply and the government was not in a position to fulfill the condition.
In order to create time to solve this issue and to mitigate the rising LPG crises, it was decided to purchase LPG via Spot Cargo as a short-term solution. Hence, quotations were called from Siam Gas Trading and the second lowest bidder O Q Trading for Spot
Siam Trading has declared that under the current economic situation, they are able to supply only 6,600 MT of LPG and that too, at the rate of US $ 112.00 per metric ton.
Litro Gas Lanka stated this would only be sufficient to meet the demand for five days and this quantity is totally inadequate to meet the growing demand of the general public who are already facing an acute LPG crisis far their day to day requirements,
The O Q Trading, who was the second lowest bidder in the aforesaid tender has said that they are in a position to meet the demand of LPG by giving an uninterrupted supply of 100,000 MT of LPG at the rate of US $ 129.00 to Sri Lanka, which is sufficient for approximately four months.
In view of the acute LPG crisis faced by the general public and with the objective of mitigating and normalizing the current situation, the Cabinet has informed Litro Gas Lanka Ltd to sign an agreement with O Q Trading on a temporary basis.
Further, until the financial status of the government improves, the Company was advised to cancel the contract with Siam Gas Trading and call for a fresh tender, Litro said.
Litro said, the US$ 17 difference per metric ton between the two bidders OQ Trading and Siam Gas Trading and translates to approximated Rs.77.S0 per 12.5 kg cylinder, which is not a significant burden proportional to the inconvenience faced by the public due to lack of LPG in the market.