20 September, 2018

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Consumer & Gas Prices In Sri Lanka

By Sarath Wijesinghe –

Sarath Wijesinghe

Consumer in Sri Lanka is not organized as in other parts of the world in protecting and enhancing their due rights under the legal system. They accept whatever is given by the trader, manufacture, industrialist, and the state (regulator – that is the Consumer Affairs Authority) in the absence of a vigilant and a powerful consumer movement. In the United Kingdom the Consumer movement and media (with magazine “WHICH” the powerful consumer magazine) are in the forefront working together assisted by – DTI Department of Trade and Industry the main regulator in UK on consumerism. Gas is a clean and cheap form of energy utilized in the household now spread in the villages as a necessity in the industry especially in the food industry in large scales, which has a direct impact on cost of living with price increases on increase of gas. Traditional methods of generating energy has replaced by gas industry monopolized by two leading giants “Laughf” and “Litro” (previously Shell) all over the country which has a direct impact on the cost of living. They have the countrywide network of distribution as a necessary consumer item which has a direct political and economic impact on the citizen and the state.

Why only Gas as a source of Energy

Every drop of gas which is a by-product in the oil industry, and also fond independently ( such as in Israel) is imported, stored in terminals in liquid form and distributed by the network of the two companies, now demanding price increases via the regulator Consumer Affairs Authority which has the authority under Section 18 of the CAA act to permit companies for increase of prices on an application made after due consideration by the regulator on the justification of the request having considered all aspects of the demand for the increase. Gas is a protected item under the CAA with few other items declared by a gazette notification to control the maximum price to ease the consumer in the receiving end while protecting the trader who is expected to be fair and reasonable. Gas has become so impotent by the consumer and industrialist that it has become a powerful voice of the citizen to maintain the price to combat fast growing cost of living due to other factors and price increases of food and consumer items. Traditionally Wood has been the main source of energy which has an impact on environment and leads to deforestation and environmental issues. Many other innovative methods of cheap, clean and environmental friends methods were introduced but not property marketed by the state instructions. Coconut/Paddy husk, Bio Gas, solar Energy, Energy Saving methods, and many kinds and types of alternate energy were used with no success and popular appeal.

Gas prices and cost of living

Gas prices have a direct effect and impact of the cost of living as it increases the cost of the household and the other bakery, consumer, industrial products and many food/ consumer and manufactured items as the a main source of energy next to electricity which is expensive. Unfortunately with the increase of the gas prices the trend is disproportion price increases of all consumer items which have no control by the CAA the main regulator responsible for the price increase. CAA is expected to make a decision considering all circumstance heavily contested by the powerful companies with the legal team in higher courts which often obtain their redress with high pressure legal and political as the inquiring officers at the CAA (generally politically appointed members of the CAA board) are influenced by the Minister in charge who always takes political decisions through the political appointed Chairman who are often not competent to handle a situation. We take this opportunity to demand the State to make arrangements to appoint the CAA Chairman by the Constitutional Council to be independent and competent.

CAA the main Regulator/Player on combating cost of living

CAA as the main Player/Regulator on combating cost of living here are series of decided cases in the legal domain on this contentious issue which has a direct political and economic impact on the country as a whole for which careful consideration is necessary as a matter of compromise/importance.  It is inevitable the companies will take to litigation if they are not satisfied with the new price formula.  Arriving at a compromise solution may not be easy especially with the incompetent and inefficient CAA head and some members who appear not delivering goods with millions spent out of tax payer’s money for the maintance of this defunct and ineffective institution which has enormous powers to act for the public benefit. It is learnt that the President is contemplating to meet the CAA in order to find their views to combat the rising cost of living through the recently formed Apex body on handling economy!. CAA is  the best available main regulator responsible to the public in combating cost of living by establishing consumer organizations and activism in educating the consumer, industrialist and trader for a proper consumer regime. How many such organizations are formed and to what extent the CAA has been in a leading role is a matter the consumer/citizen will be in a position to judge.

Way Froward

Gas is commonly used by the citizen, manufacturer and industrialist in day to day life and industry which is a sensitive topic which has direct impact and relevance to the citizen. This has to be careful handled with a short and long term solutions. Control of price increments are to be handled carefully, and long and short term changes in the CAA is a necessity by appointing able and competent head selected by the constitutional council and not on political criteria. Chairman is preforming a semi judicial functions and a person with legal background or a retired Judge is preferred. Alternate energy providers such as solar and new innovations should be explored especially cater the villages and a powerful consumer activism and formation of consumer organisations should be formed with countrywide network. Special emphasis should be given Israel way of innovative methods of generating energy with the abundance of our resources, such as solar, wind, bio, waste, and introducing various forms saving mechanisms. Let CAA start the campaign to mobilize the citizen/organizing consumer organisations/education programs countrywide with the help of legal aid unit and civil society, on 15th March 2018 the world consumer day!

*Sarath Wijesinghe – former Chairman Consumer Affairs Authority- former Ambassadors to UAE and Israel, could be contacted on sarath7@ Hotmail.co.uk

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Latest comments

  • 2
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    Sir, why our officials and politicians not exploiting the gas reserves which was discovered off shore in Mannar. It would give tremendous boost to the economy, and great relief to the local consumers. Israel’s recently discovered off shore gas field is coming onstream, and they are already signed a thumping US. 15B deal with Egypt to supply gas. Before they were buying gas from Egypt but now they are selling it to them. When Malaysia found gas off shore, all the world’s oil majors offered them very poor terms but they went after the energy hungry Japanese, these Japanese companies offered them better terms, and now Malaysia is the fourth biggest gas producer in the planet. Not only exporting to the world but gas is cheap locally in Malaysia. Our people our good in sitting on their big bums and do nothing. If no resources to exploit it, they could tie up with energy hungry India, China, Japan or Korea on production sharing basis like all other gas and oil producing countries in the world to get this job done.

  • 0
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    If you Litro is the indian counter part of an Multinational (Dutch ?) petrolum company, I can imagine why Petroleum corporation is money losing every time (I heard it is because of Politicians paumping gas my car had a gas leek but they have sold the (probably the drive) and they pump again. There should be a problem that foreign companies are trying to buy out CPC. Besides, I heard those days even Govt GA’s in the north ha dhelped that by they theemselves becoming part of that. Even todate PEtrol prices are politically manipulated. Even the oil producing western countries which doe snot have a traffic jam as in Sri lanka has high gas prices. Why Sri lanka which doe snot produice petrol has lower prices. I remember Mahinda Rajapske lowered prices for his benefit. I think the SAITM problem was a manoever to cover the GMOA getting into SLMC is a Ploy to take over pharmaceutical reigstration (Sri lanka has a problem with Vasccines, doctors giving vaccines to every body) and pharmaceutical price increases or fixing. whart yoy are suggesting can go wrong. Because, the people can be paid bribes. I heard some people were conenct with a Polythene (PEtroleum product) scam to bundle the money sent overseas. I could not believe that shell is still in Sri lanka in a different name.

  • 0
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    I heard some expats expecting that Mahinda Rajapkse’s would be next are getting ready for business opportunieis in order to fix Mahinda Rajapakse this tiem too.

  • 0
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    Between 1977 and 1985, any price increase of LPG had to be approved by the National Prices Commission, at that time Chaired by yet another excellent Civil Servant of the old school. To get approval, proper pricing structure had to be made, showing every aspect of the cost of production and sales. Salaries, cost of power, transport, over-heads etc etc had to be provided and the N.P.C invariably had several meetings with the Gas Compnay and it was incumbent on the latter to show why an increase is justified.

    Most or all essential consumer items came under the N.P.C watch. So what has happened to the N.P.C?!

    • 0
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      This is rather rich, coming from a former Chairman of the Consumer Commission, during whose time gas prices were actually higher than now. I wonder why his conscience did not trouble him then?
      It might also interest readers that petrol /gas prices in our neighbour India are about 30% higher, even though some of their supplies are domestically produced. They have an automatic pricing formula, with a very limited gas subsidy for the poor.
      It is time we too got rid of vote-catching subsidies and sold fuel at market price. The more upward revisions are delayed, the more griping there will be when it eventually happens.

  • 0
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    The world is warming. So, the LPG prices are supposed to go down. some of the investments in North america were cancelled by the govt because they would not earn the taxes they expect. So, price increases would be simply to gauge the customer. LPG is really cheap, unlike petroleum more and more deposits are found every time. Sri lanka can get Indian, Myanmar and Middle east too. Only problem is Sri lanka doe snot have infra structure to use it widely. Even old cars can be convertd to LPG because, Wewstyern countries won’t allow it but in LAtin america LPG is widely used in Cars. Did you Meddle with Milk powder prices ?

  • 0
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    I think only the Laugh sells Gas and not CPC. so, it is a monopoly and right now Gas prices in Sri lanka are too high.

  • 0
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    PWEtrol, diesal Prices are higher in Nirther america where is being produced, and they have ample resources. In sri lanka, it is politics. Govt allowes cars and reduce the petrol prices which is not consumed by the poor.

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