By P. Karunakharan
Colombo, June 19 (IANS) Sri Lanka Thursday asked the Indian oil giant, Lanka Indian Oil Corporation (LIOC), to sell its petroleum products at reduced prices or face unspecified action, officials said. After the recent price revision, the state-owned Ceylon Petroleum Corporation (CPC) sells auto diesel at Rs.110 per liter while LIOC is selling at Rs.130 per liter, although both are selling petrol at the same price in their respective outlets.

“We received a letter of advice today (Thursday) from the Petroleum Ministry that we should sell all our products at the prices that of the CPC, otherwise appropriate action would be taken,” LIOC managing director K. Ramakrishnan told IANS Thursday.

He said LIOC was selling all its products at prices on par with the CPC at its petrol stations, and compensating the loss in selling diesel with the extra profit in selling petrol.

“It had worked well till May 25 when the Sri Lankan government imposed an additional tax in the name of customs duty on the imported petrol,” he said, adding LIOC was forced to increase the diesel price by Rs.20 more than that of the CPC to cover its losses.

“Selling diesel at Rs.130 per liter is our cost price and there is no profit or loss. Expecting us to sell diesel less than the cost is not just practicable, which the Petroleum Ministry is well aware of. We will not be able to survive for long if we do it,” Ramakrishnan said.

LIOC, which has 153 retail outlets throughout Sri Lanka, holds 19 percent of the market share in distributing fuel products. On an average, it sells 15 million liters of petrol and 30 million liters of diesel in Sri Lanka while the CPC sells 45 million liters of petrol and 170 million liters of diesel per month.

Ramakrishnan said LIOC is looking forward to explain to the government of Sri Lanka the difficulties faced by it in carrying out its latest demand.

He, however, said the letter from the ministry did not mention any “specific action to be taken if LIOC fails to comply with its latest demand”.

“We are a local company, we are a shareholder, we have a liability, we have responsibility. We are into a business which is important and all our petrol stations are serving people well. So, whatever the government says is final, we will go by that,” he said.

Sri Lanka’s Petroleum Minister A.H.M. Fowzie was not available for comment immediately.

LIOC is a subsidiary of Indian Oil Corporation Ltd and is the only public oil company other than the CPC. 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 Oil Tank farm.

LIOC is the only company in Sri Lanka that imports petroleum products in two ports - Colombo and Trincomalee and keeping stocks in both places. In November last year, the IOC commissioned a $5 million lube oil blending plant with the capacity of 18,000 tonnes a year.

Annually, Sri Lanka consumes not less than four million tonnes of fuel products. The nation depends 100 percent on imports for its fuel product needs.