The latest international tender issued by Litro Gas Lanka Ltd, Sri Lanka’s state-owned LPG distributor, for the procurement of 380,000 metric tonnes (±20%) of liquefied petroleum gas (LPG) for 2026, has drawn significant attention following an unexpected amendment. The tender, initially published on August 27, 2025, closed in mid-September.
Just before the deadline, Litro inserted a new clause in the conflict of interest section, raising alarm within the industry and sparking political debate.
The amendment, listed under Section 11, Clause 4.2 (new Clause VIII), states:
“Bidders shall be permitted to lease the competitor’s terminal facility in Hambantota. However, Litro will bear no responsibility for the product or any related logistics arrangements until the product is delivered to the Litro CBM terminal.”
While the clause ostensibly offers bidders greater flexibility, critics argue that it effectively nudges them toward relying on infrastructure owned by LAUGFS Gas, a direct competitor of Litro. The move has reignited debates about the strategic role of the Hambantota terminal in national energy security and raised questions regarding procurement transparency.
Currently, Litro operates a modest 8,000 MT terminal at Kerawalapitiya, supported by smaller facilities at Mabima. Meeting Sri Lanka’s domestic LPG demand of approximately 32,000 MT per month requires frequent imports. In comparison, LAUGFS Terminals Ltd controls a 30,000 MT state-of-the-art terminal at Hambantota, along with a 3,000 MT facility at Mabima, giving it a distinct advantage in storage and transshipment capacity.
This capacity gap lies at the heart of the controversy. By allowing bidders to use the Hambantota terminal, Litro risks creating a dependency on its rival’s infrastructure. “It is like asking a state company’s suppliers to pay rent to its competitor,” said one energy analyst.
The Hambantota terminal has long been a flashpoint. In June 2021, the government proposed a public-private partnership to allow Litro and LAUGFS to jointly operate the terminal for LPG storage, as reported by Business Times. The initiative, promoted by LAUGFS Chairman W.K.H. Wegapitiya, aimed to cut costs by around US$70 per metric tonne and stabilize retail prices. A special committee was appointed to study its feasibility, but the proposal stalled due to political uncertainty and concerns over ceding strategic control of the nation’s energy supply.
Procurement specialists note that any substantial clause change should be issued as a formal addendum and circulated equally to all bidders. Failure to follow due process could result in legal challenges before the Procurement Appeal Board or in courts.
For foreign suppliers, the amendment introduces operational risks: reliance on a private competitor’s terminal can increase costs, reduce flexibility, and complicate logistics. For Sri Lankan consumers, a smaller pool of bidders could translate into higher prices and reduced security of supply.
