LAUGFS Gas PLC has been taken to court by the state consumer watchdog as Sri Lanka’s liquefied petroleum gas (LPG) shortage deepens and questions grow over how the company was run.
The Consumer Affairs Authority (CAA) filed the case on 29 October, accusing the company of breaching consumer protection directives and causing public inconvenience.
Company executives have been summoned to appear before the Colombo Chief Magistrate’s Court on 11 November.
Trade Minister Wasantha Samarasinghe said two promised shipments of 3,800 metric tons each, due between 24 and 28 October and in the first week of November, failed to arrive, while a cargo expected on 3 November has been pushed back to 14 November.
Sanctions expose a weak balance sheet
The disruption follows action by the US Treasury Department’s Office of Foreign Assets Control, which placed Slogal Energy DMCC on its Specially Designated Nationals list.
The Dubai-based subsidiary handles part of LAUGFS’ international procurement, and the listing relates to alleged dealings involving Iranian-origin LPG shipments.
The company has denied knowingly engaging in prohibited transactions and has begun a compliance review.
The sanctions have nonetheless upset international banking arrangements, making it harder to secure letters of credit and arrange new cargoes.
Critics argue that the sanctions alone do not explain the crisis.
The company’s audited accounts show a full-year net loss of about Rs. 2.52 billion, and later reporting periods point to further losses. Group liabilities reportedly exceed Rs. 41.2 billion, against shareholders’ equity of about Rs. 1.79 billion.
Heavy borrowing and rising finance costs have further limited its ability to pay for supplies on its own.
These figures raise doubts over whether the firm could maintain statutory reserves, find alternative suppliers and meet its obligations to the domestic market. The slippage has also unsettled confidence in commitments for November and December.
New owner, old questions
The company’s ownership has changed at the same time. Billionaire businessman Dhammika Perera has acquired a 50 per cent stake in LAUGFS Holdings through Vallibel Three (Pvt) Ltd.
Co-founder Thilak De Silva sold his entire 39.6 per cent holding, and Chairman W K H Wegapitiya sold 10.4 per cent.
Perera is a former National List MP and Investment Promotion Minister, which gives the deal added weight.
His arrival does not make him responsible for the company’s earlier financial troubles or procurement failures.
The issue is whether the new arrangement will bring financial stability, transparent management and steady supplies.
The Government, for its part, must establish whether the company’s internal problems were properly disclosed before the restructuring, and whether the new controlling shareholder has committed enough money to restart procurement.
In the meantime, the state-owned Litro Gas has raised its daily distribution by 80,000 to 100,000 cylinders to make up for the lost market share, shifting the immediate burden onto the public sector.
Sri Lanka needs more than corporate assurances and rescheduled delivery dates, and only an independent investigation into LAUGFS’ procurement, finances, reserve compliance and ownership change can ensure that households do not pay for the failings of a private supplier.
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