The Cabinet has given its nod to an agreement for the supply of Liquefied Petroleum Gas (LPG) in Sri Lanka for the year 2027. Accordingly, Litro Gas Lanka will be awarded a contract for the supply of cooking gas for a period of 12 months.
Under this agreement, which will come into effect from January 1, 2027, it is planned to distribute 420,000 metric tons of gas. There is room for an increase or decrease of up to 20 per cent, and at least 336,000 metric tonnes of gas has been confirmed to be delivered.
Cooking gas plays an important role in the daily life of the country. Households, restaurants and various commercial establishments use gas. Therefore, regular import and supply of gas is essential for the daily activities of the public and the economy of the country.
By pre-determining the supply contract for 2027, steps have been taken to plan gas imports for next year. However, it cannot be said that the coming into force of this agreement alone will reduce retail prices. The impact will depend on import cost, world market price and other costs.
Contract selection after international bidding
The bids were invited under international competitive pricing to procure gas supply for the year 2027. It is reported that four bids were received instead.
After evaluation of the bids, the Cabinet has decided to award the contract based on the recommendation of the High Level Procurement Committee. This action is part of the process of evaluating the price and supply conditions for gas purchase and selecting a suitable company.
The contract price will be calculated with Saudi Aramco’s contract price plus a fixed premium of US$133.93 per metric ton. The price is fixed on CIF basis which includes insurance and shipping costs.
Accordingly, when the base price of gas changes in the international market, the cost of import may also change. Therefore, the total purchase cost should be estimated keeping in mind the world market price along with the additional amount fixed under the contract.
The Minister of Finance, Planning and Economic Development had submitted the idea of this agreement to the President’s Cabinet. It has been mentioned in the published news that the cabinet has given permission.
Gas supply and public expectations
Ensuring uninterrupted supply of cooking gas is an important issue for the public. In particular, during periods of gas shortages, daily activities in homes and restaurants may be affected and the need to use alternative fuels may arise.
The key aspects that the public can look out for in this deal are adequate availability of gas, uninterrupted supply and affordable prices for the public. However, comments presented repeatedly in reader comments for a particular message were not independently verified.
At the same time, transparency of the contract, monitoring of procurement costs and proper management of gas supply are also important. If the benefit of the contract is to reach the public, the steps from procurement to market distribution must be carried out effectively.
Cabinet approval for the gas supply agreement for 2027 is an important development in Sri Lanka’s gas import plan for next year. The main expectation of the public will be how the supply continuity and price situation will play out once the deal comes into force.