Will Oman Trading which is not a competitor bidder be selected again?
Litro Gas is yet to renew the contract with Oman Trading International after the Contract had expired on 9 January 2022; one of the prime reasons for the ongoing Gas crisis.
According to reliable sources, Oman Trading International LPG Trader Abdullah Alzadjali and their local agents had signed the contract.The then Yahapalanaya Government had blacklisted Oman Trading International from 2016 to 2018. The ban had been largely due to the erratic Contract Price and the local agents’ shoddy deals with Oman Trading.
After the Contract with Oman Trading had expired, former Litro Chairman Jayasinghe had tabled a new Contract and Tenders had been called in January 2022, shortly before he resigned. It is said that Siam Gas from Thailand was selected as the ‘competitive bidder’, followed by Cabinet approval. Oman Trading too had submitted its bid but Siam Gas’s quoted freight and Insurance charges per metric ton had been USD 95 as against Oman Trading’s USD 129 per MT which was higher.
However, we learns that the new Litro Chairman Peiris has said that it may not be possible to proceed with the proposed purchase of Gas from Siam Gas since it has requested to open a Stand-By Letter of Credit (SBLC). Peiris, in a TV-interview on 15 June, has stated that it may not be possible to do so. Siam Gas had indicated that it would deliver only 6000MT of Gas whereas Oman Trading had outlined its position stating that the opening of an LC would not arise and that it could deliver 100,000MT of LGP. Whether Litro would purchase Gas from Oman Trading or Siam Gas is yet to be finalised.
However, the Oman deal would cost Sri Lanka USD 34 more per MT compared to Siam Gas,
Former Chairman of Litro Eng. Vijitha Herath said, “The process of importing Gas from Siam Gas has already commenced but it seems that there are some internal disputes relating to it, which is why I resigned. The Cabinet had approved the procurement of LP gas from Siam Gas for a period of one year, however now the new Litro Chaiman has plans otherwise.”
Between December 2019 and 15 June 2022, Litro Gas Company has had four Chairmen, which, in itself, shows the magnitude of the institution’s destiny, the state of affairs and the current plight of its customers. Muditha Peiris, the new Litro Chairman, has taken over the reins on 15 June. However, Litro Gas is one of the enterprises where consumers do not have the benefit of obtaining supplies of cooking gas on credit and this in a way raises the question as to which or whose coffers the returns keep flowing. It is common notion that due to the forex crisis, LitroGas cannot be purchased, but is this the real scenario? The salary and allowances of Litro Gas Company employees are alarmingly exorbitant as the top management officials draw monthly salaries and allowances running into millions.
To cite an example, the former Director Finance had been drawing over Rs two million per month.
Apart from the exorbitant pay, there appears to have been shoddy deals with overseas LPG suppliers where the earlier Chairman Theshara Jayasinghe and Vijitha Herath had conspired to, which, upon being brought to light,became theprimary cause for their stepping down.
The National Audit Office report of March 2022 depicts shady transactions by Litro’s top management. The Audit covers the Administration of Expenses for the Years 2020 and 2021 of Litro Gas Lanka Ltd (the Company) and Litro Gas Terminal Lanka Pvt Ltd (LGTLL).
Anil Koswatte, who was chosen as soon as President Gotabaya Rajapaksa was elected in 2019, was one of the four Chairs; Koswatte served as Chairman of both Litro Gas Lanka Ltd and Litro Gas Terminal Lanka Pvt Ltd (LGTLL). He remained in office till June 2021.
We were made to understand that the newly appointed Chairman Muditha Peiris, as well as the previous Chairmen Vijitha Herath and Theshara Jayasinghe, are not ‘paid positions’ with specific reference to salary and vehicle loans.
Meanwhile, Litro Gas top management enjoyed perks such as vehicles and fuel allowance, among other benefits according to the Audit Report.
Muditha Peiris was Litro’s Managing Director during the Yahapalanaya regime of ‘Sirisena-Wickremesinghe’, and was removed in 2019; no sooner the present government came into power.
In this backdrop, it is of much concern to note that the personnel associated with this money minting institutions had been paid exorbitant remuneration packages.
The said Audit Report highlights that; as per the Department of Management Services (DMC) Circular dated March 2018, relevant authorities should refrain from recruiting employees; refrain from increasing the salaries and allowances of their employees, without obtaining prior approval from the DMC and the Treasury.In violation of this stipulated rules and regulation, salaries and allowances had been increased during the year 2020 and 2021; without obtaining prior approval of the DMC and the Treasury as listed below:
Staff vehicle loans amounting to Rs181.52 million to 30 officers of LGTLL have been granted during 2020-2021. It explains that 50 per cent of the loan amount granted by Litro Gas Company or LGTLL should be settled by an employee/officer who does not complete service for five years from the date on which the loan was obtained, at the time of resignation or termination. Further, recoveries are made through monthly instalments from their entitlement of monthly vehicle allowance.
The details: (Table 1 Staff Vehicle Loan and Allowance Chart)
The former Chairman/CEO who was the Chairman/CEO of both the said companies had obtained two vehicle loans amounting to Rs19.5 million in August 2020 and 50 per cent of the said loan which stood at Rs. 9.76 million had been borne and settled by Litro and LGTLL on 26 July 2021 and 20 August 2021 since he had not completed the five-year service, when he was replaced.
The Audit also finds that job-related vehicle loans amounting to Rs 251 million to 33 officers had been granted at zero interest in September 2020.
In this regard, the Events and BTL Advertising Manager, the Bulk Account Manager, the Regional Sales Manager, Manager CSC and Compliance and the Regional Sales Managers of both companies (Litro and LGTLL) had received vehicle loans; Rs 8,660,000 each with an entitlement of Rs 140, 000 as monthly vehicle allowance, from which a sum of Rs105,000 had been recovered in monthly installments, leaving a nett amount of
Rs 35,000 to the credit of the officers concerned. In addition, they had also enjoyed a fuel limit of 400 litres.
The Auditors drew a comparison of the Chairman of any State-owned enterprise (SOE) to Litro and LGTLL and this is what they had to say:
A Chairman of any SOE could only draw an allowance of Rs100,000 per month or as stipulated in section 2.1 and 2.2 of the Public Enterprises Circular.
Also in this connection, a Chairman, MD, Executive Director, CEO, Director General of any SOE is entitled to use only one official vehicle and fuel allowance equivalent to 150 litres per month, while payment of allowance to any State Executive Directors could draw a maximum allowance of Rs 90,000 per month as stipulated in 2020.
But contrary to this, the Litro Executive and Non-Executive Director’s and CEO’s vehicle, fuel and drivers’ allowances have been determined as stated below:
The salary revision had been based on the market adjustment of 5 to 40 per cent on the salary drawn as at 12 December 2021 of each individual of the Litro Company and LGTLL which had been approved by the Board of Directors of the respective Companies at its meeting held on 23 September 2020, with effect from 1 January 2021.
The details of salary are indicated below:
Table Number 5 (Litro salary)
Table 6 (LGTLL salary)
According to the Auditors, the Chairman /CEO of Litro who was also the Chairman/ CEO of LGTLL drew salary relating to the JG 1 group for the Company and 50 per cent from the said salary from LGTLL.
The monthly salary of Rs 575,000 to the Chairman /CEO of the LGTLL had been paid since 2020. A monthly entertainment allowanceof Rs 150,000 had also been paid to the Chairman/CEO (both Litro and LGTLL) since 2020. In addition, a monthly entertainment allowance of Rs 100,000 had been paid to the Sales Director since 2021.