Shell to curtail supplies

Shell Gas Lanka has informed that it has decided to curtail the supply of domestic LP Gas cylinder to mitigate its mounting losses.

The Shell Gas Lanka announced its decision of the curtailment of domestic LPG supplies in a press statement yesterday.

The statement: The current selling price of a 12.5 kg domestic LP gas cylinder in Colombo is Rs. 850 and is based on the average of August and September 2005 FOB import cost of US $ 417/mt.

We had applied as per past practice and existing pricing formula for a price increase effective December 31 2005 based on average FOB import cost of US $ 523 mt in October/November. This application was rejected by the CAA, whereas import costs have risen to US $ 582/mt in January 2006.

The current cost of imports is even higher than the average of August/September 2005, by $ 165/mt. We are therefore incurring a loss of Rs. 64 per 12.5 kg LP gas cylinder only on the landed cost of product, i.e. gross loss on each cylinder sold at the price allowed by the CAA.