LAUGFS Gas PLC says three LPG cargoes are due to reach Sri Lanka between 12 and 28 November, but the company still needs regulatory clearance before it can release gas from its Hambantota terminal into the domestic market.

The company set out the schedule in a statement on Tuesday. A cargo from OQT is expected at Hambantota Port between 12 and 14 November; a Geogas cargo at Colombo Port between 15 and 17 November; and a second OQT cargo at Hambantota between 24 and 28 November, the Daily Mirror reported. The same three windows were reported by Hiru News.

Arrival dates remain subject to shipping arrangements, port operations and regulatory approvals, and distribution is expected to resume only gradually once the cargoes are cleared.

LAUGFS apologised for the difficulties caused to households and businesses by the ongoing disruption, and said that as a local company that has served the Sri Lankan LPG market for more than 25 years it remained committed to restoring supply.

The regulatory bottleneck

The more consequential part of the statement concerns why the terminal cannot simply supply the local market.

LAUGFS Terminals Ltd, a wholly owned subsidiary, has sought three months of temporary permission to use its Hambantota facility for domestic LPG supply. The US$65 million terminal, which began operating in 2019, has 30,000 tonnes of storage and is described as Sri Lanka’s largest LPG receiving, storage and entrepôt facility.

Its status under the Board of Investment’s Commercial Hub framework restricts domestic releases, which are tied to 40% of the annual value of re-export turnover. The company said the COVID-19 pandemic, the economic and political crisis, foreign exchange shortages and sovereign rating downgrades had all cut its re-export volumes, which in turn capped what it could release locally.

LAUGFS said it is working with the BOI, the Finance Ministry, Sri Lanka Customs and the Department of Imports and Exports Control to transition out of Hub status, with applicable duties and taxes payable.

The company added that the BOI Chairman informed it on Monday that, following instructions from President Anura Kumara Dissanayake, he had written to the Secretary to the Treasury asking that approvals be facilitated within a week. Those approvals remain pending.

LAUGFS attributed the wider supply problem partly to the conflict in the Middle East and disruption to shipping through the Strait of Hormuz, which has affected LPG supply chains for Sri Lanka and other importing countries. It has also called a fresh tender for direct LPG deliveries to Colombo.

Context

The shortage has produced visible queues for cylinders in Colombo and other towns in recent days, and prompted action by consumer authorities against hoarding.

Neither filing gives the tonnage of the three cargoes, so the volume reaching the market cannot be estimated from what has been reported.