Rationality of gas company making losses questioned
One analyst asked if Litro Gas, the second player in the market can make profits how can only Laugfs make losses. He pointed out that since the setting up Litro in 2010 it had given over Rs. 13 billion dividend to the treasury so far. “Litro and Laugfs purchases LP Gas from the global market at the same price and hence the claim that Laugfs are making losses due to their own mismanagement and may be due to investing money on other loss making entities,” he alleged. He said the Laugfs senior management’s claim that they operate the Gas business with less freight charges too gives an edge to them over Litro and claim that they make losses cannot be accepted. He also said that the current global gas prices have increased from USD 364 per metric ton to $680 and it’s an added overhead to suppliers. “But these companies made profits when the prices were low.”
Due to the current gas shortage a panic buying spree has emerged whereby people are buying new Litro cylinders and people are filling their spare cylinders as well. “This has resulted in the increase of daily demand from 80,000 to 105,000 cylinders.” He said that today there is an acute shortage of domestic gas cylinders due to the import ban. The analyst also said that there is a 100% guarantee that there would not be any hazard by filling Laugfs cylinders with Litro which are all made to international standards. “The only difference in the cylinders is the color.”
Meanwhile an official from Litro said that they did pay a dividend of Rs. 13 billion to the Treasury in addition to paying other taxes. “We have also successfully placed an order for a new consignment of gas hence people do not have to panic.” Asked if they are not facing a USD issue he said they deal with an international bank and do not face such an issue. Asked why they cannot refill Laugfs cylinders he said that there is an intellectual property issue. “A simple gazette notification is what is only needed to change this legal issue and when it’s done we have enough resources to feed the entire nation’s requirement of gas.To my knowledge we had made an offer to sell LG gas in bulk to Laugfs but this offer was not accepted by them. As a responsible company we are also ready to not only to fill Laugfs cylinders but are even ready to allow their dealers to distribute it,” he added.