Posted on April 30th, 2018

Sarath Wijesinghe – former Chainman Consumer Affairs Authority

Cost of living and gas prizes

Cost of living is proportionate to, and depends on the prices of the consumer items and the management of the economy and trade by the governance. Gas plays a main role in cost of living as the use of gas is fast increasing due to the shortage of traditional wood and want of clear, fast, energetic and convenient energy. Every drop of gas is imported in liquid form and distributed by two main companies Litro” and Laughfs” with full monopoly on the trade and distribution.   Gas prices have been revised/increased again by virtue of Section 18 of the Consumer Affairs Authority act as an essential item to the consumer when the prices of other consumer articles are outside price control under act no 9 of 2003 where only a limited number of consumer articles  could be placed under the price control. Every drop of gas in imported which is mainly used in cooking and food industry as the main source of clean energy in place of traditional wood which leads to environment issues. The line minster identifies the consumer items he considers essential based on a research by the CAA will declare by a Gazette notification declaring certain items essential with the maximum price for the items declared. Milk powder, Cement some of the 30 items  identified with maximum prices when the trader is free to sell other items freely at the chosen prices with a price tag which is a requirement under the regulations in the second part of the CAA act under regulations. It is informed that the prize of a gas cylinder has gone up by 245 rupees when the Gas prizes in the international market has come down from 590 used to 450 used based on ARAMCO standards which is a subsidiary of the Saudi Arab and Private syndicate on  monitoring world oil prizes. A completed procedure is to be adopted by the CAA with an official inquiry conducted by members appointed with experts to decide on the prices generally contested in the highest courts if the companies are not satisfied with the increase of prices. Unfortunately no consumer organizations are concerned or intervene on behalf of the consumer unlike in other parts of the world when the consumer is organized and powerful.

Consumer not organized in Sri Lanka

Consumer in Sri Lanka is not organized as in other parts of the world in protecting and enhancing their due rights under the legal system. They accept whatever is given by the trader, manufacture, industrialist, and the state (regulator – that is the Consumer Affairs Authority) in the absence of a vigilant and a powerful consumer movement. In the United Kingdom the Consumer movement and media (with magazine WHICH” the powerful consumer magazine) are in the forefront working together assisted by – DTI Department of Trade and Industry the main regulator in UK on consumerism. EU, India, and other parts of the world consumerism is organized and powerful unlike Sri Lanka. Gas is a clean and cheap form of energy utilized in the household now spread in the villages as a necessity in the household and  industry- especially  food industry in large scales, which has a direct impact on cost of living with price increases on increase of gas. Traditional methods of generating energy has replaced by gas industry monopolized by two leading giants Laughf” and Litro” (previously Shell) all over the country which has a direct impact on the cost of living. They have the countrywide network of distribution as a necessary consumer item which has a direct political and economic impact on the citizen and the state.

Why only Gas as a source of Energy

Every drop of gas which is a by-product in the oil industry, and also find  independently ( such as in Israel) is imported, stored in terminals in liquid form and distributed by the network of the two companies, now demanding price increases via the regulator Consumer Affairs Authority which has the authority under Section 18 of the CAA act to permit companies for increase of prices on an application made after due consideration by the regulator on the justification of the request having considered all aspects of the demand for the increase. Gas is a protected item under the CAA with few other items declared by a gazette notification to control the maximum price to ease the consumer in the receiving end while protecting the trader who is expected to be fair and reasonable. Gas has become so impotent by the consumer and industrialist that it has become a powerful voice of the citizen to maintain the price to combat fast growing cost of living due to other factors and price increases of food and consumer items. Gas is often used in place of fuel in many countries for cheap and clean energy. as a Traditionally Wood has been the main source of energy which has an impact on environment which leads to deforestation and climatic issues. Many other innovative methods of cheap, clean and environmental friends methods were introduced but not property marketed by the state instructions. Coconut/Paddy husk, Bio Gas, solar Energy, Energy Saving methods, and many kinds and types of alternate energy were used with no success and popular appeal.

Gas prices and cost of living

Gas prices have a direct effect and impact of the cost of living as it increases the cost of the household and the other bakery, consumer, industrial products and many food/ consumer and manufactured items as the a main source of energy next to electricity which is expensive. Unfortunately with the increase of the gas prices the trend is disproportion price increases of all consumer items which have no control by the CAA the main regulator responsible for the price increase. CAA is expected to make a decision considering all circumstance heavily contested by the powerful companies with the legal team in higher courts which often obtain their redress with high pressure legal and political as the inquiring officers at the CAA (generally politically appointed members of the CAA board) are influenced by the Minister in charge who always takes political decisions through the political appointed Chairman who are often not competent to handle a situation. We take this opportunity to demand the State to make arrangements to appoint independent, competent and educated the CAA Chairman by the Constitutional Council.

CAA the main Regulator/Player on combating cost of living

CAA as the main Player/Regulator on combating cost of living here are series of decided cases in the legal domain on this contentious issue which has a direct political and economic impact on the country as a whole for which careful consideration is necessary as a matter of compromise/importance.  It is inevitable the companies will take to litigation if they are not satisfied with the new price formula.  Arriving at a compromise solution may not be easy especially with the incompetent and inefficient CAA head and some members who appear not delivering goods with millions spent out of tax payer’s money for the maintenance of this defunct and ineffective institution which has enormous powers to act for the public benefit. It is learnt that the governance is contemplating to meet the CAA in order to find views to combat the rising cost of living through the recently formed Apex body on handling economy! CAA is the best available main regulator responsible to the public in combating cost of living by establishing consumer organizations and activism in educating the consumer, industrialist and trader for a proper consumer regime. How many consumer organizations are formed and whether a single organization is active is a matter for the consumer to judge.

Way Froward

Gas is commonly used by the citizen, manufacturer and industrialist in day to day life and industry which is a sensitive topic which has direct impact and relevance to the citizen. This has to be carefully handled with a short and long term solutions. Control of price increments is to be handled carefully and long and short term changes. CAA Chairman is preforming a semi judicial functions and a person with legal background or a retired Judge is preferred. Alternate energy providers such as solar and new innovations should be explored especially cater the villages and a powerful consumer activism and formation of consumer organisations should be formed with countrywide network. Special emphasis should be given in Israel way of innovative methods” of generating energy with the abundance of our resources, such as solar, wind, bio, waste, and introducing various forms saving mechanisms. Let CAA start the campaign to mobilize the citizen/organizing consumer organisations/education programs countrywide with the help of legal aid unit and civil society for innovations, organization of consumer organizations and organized consumerism.



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