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Colombo warns Lanka IOC of takeover

COLOMBO: Sri Lankan Minister for Petroleum A.H.M. Fawzy on Thursday told Parliament that the Government would take over the more than 150 petrol/diesel stations operated by Lanka Indian Oil Corporation (LIOC) if the company did not bring down the price of diesel on par with the state-owned Ceylon Petroleum Corporation (CPC).

Mr. Fawzy said that if the LIOC was operating on the sole principle of making profits, the government would be left with no alternative but to take over its operations. He said he had already written to the Managing Director of the LIOC on the subject.

The Minister’s statement comes three weeks after the LIOC hiked the price of diesel by Sri Lankan Rs.24 a litre on the ground that it was forced to go for the hike after the government imposed a fresh levy of Sri Lanka Rs.24.50 a litre on imported petroleum products.

The Minister told The Hindu that due to the Sri Lanka Rs.24 price difference a litre in the diesel sold by the LIOC and the CPC, the consumers of the former have shifted to the latter. “This is too much of a burden for the CPC. I have written to the LIOC asking them to bring the price of diesel on par with CPC. Otherwise, the government would be forced to take very drastic action,” the Minister said.

The LIOC MD, K. Ramakrishnan, said that his company was compelled to hike the price of diesel after the government slapped a new levy. “The burden on account of the additional duty imposed by the government on the LIOC would amount to Sri Lanka Rs.4.4 billion per annum. How can they expect us to survive? The CPC gets a benefit of Sri Lanka Rs.6 billion per annum as 50 per cent of its petroleum products are processed within the country whereas all our products are imported.”

Lanka IOC, Indian Oil’s subsidiary in Sri Lanka, is the only private oil company other than the state-owned CPC that operates retail petrol/diesel stations in the country.

It has been incorporated to carry out retail marketing of petroleum products, bulk supply to industrial consumers, building and operating storage facilities at the Trincomalee Tank farm.

It took over 100 CPC-owned petrol/diesel stations in February 2003 and commenced retailing products to customers.

Subsequently, it took over 59 dealer-owned franchisee retail outlets.

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