Lankan IOC slashes diesel price after takeover warningJune 24th, 2008 - 8:00 pm ICT by IANS
By P. Karunakharan
Colombo, June 24 (IANS) The Lanka Indian Oil Corporation Tuesday decided to bring down the price of diesel by 10 Sri Lankan rupees. Petroleum Minister A.H.M. Fowzie last week warned of takeover of all 153 LIOC outlets if the company did not bring down its diesel price on par with the state-owned Ceylon Petroleum Corporation (CPC). “In view of the advice from the petroleum minister, the Lanka IOC drops the selling price of diesel by Rs.10 per litre to Rs.120 per litre with effect from 00:00 hours of Wednesday,” Lanka IOC managing director K. Ramakrishnan said Tuesday.
“This means the price of diesel of LIOC will be higher by Rs.10 per litre when compared with the CPC,” he said. However, the price of LIOC petrol will continue to be the same as of CPC at Rs.157 per litre.
The petroleum minister told parliament Thursday that the government would be left with no option but to take over all 153 of the LIOC petrol vends across the country if it did not bring down the price of diesel on par with CPC.
Fowzie told IANS Tuesday evening that LIOC has to bring down diesel price on par with the CPC and there was “no change” in his position in this regard.
“The CPC is incurring huge losses due to LIOC’s decision to jack up the diesel price by Rs.20. I made the request in the national interest. Now that the LIOC has decided to bring down the price by Rs.10, it has to bring down the balance Rs.10 too,” Minister Fowzie said.
The LIOC increased the price of diesel by Rs.24 rupees a litre on the ground that it was forced to go for the hike after the government imposed a fresh levy rupees 24.50 cents per litre on imported petroleum products.
Ramakrishnan said the LIOC was selling all its products at prices on par with the CPC and compensating the losses on account of diesel with the profit from petrol. But it was forced to increase diesel price by Rs.20 after the fresh government levy.
But the minister argued that due to the price difference the LIOC’s consumers too have shifted to the CPC, making its losses unbearable.
The LIOC, which has 153 retail outlets throughout Sri Lanka, holds 19 percent of the market share in fuel products. On an average, LIOC sells 15 million litres of petrol and 30 million litres of diesel in Sri Lanka while the CPC sells 45 million litres of petrol and 170 million litres of diesel per month.
LIOC is a subsidiary of Indian Oil Corporation Ltd in Sri Lanka, which 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.
Lanka IOC is the only company in Sri Lanka that imports petroleum products in two ports - Colombo and Trincomalee - and keeps 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 about four million tonnes of fuel products for various purposes. The island nation depends entirely on imports for its fuel product supplies.
Tags: 50 cents, ceylon, colombo, cpc, diesel price, indian oil, indian oil corporation, ioc, levy, litre, managing director, national interest, petrol, petroleum corporation, petroleum products, ramakrishnan, rs 120, slashes, sri lankan rupees, tuesday evening