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Asian Tribune is published by World Institute For Asian Studies|Powered by WIAS Vol. 12 No. 2615

Lanka IOC operations runs to a standstill

Looks at a compromised settlement with the Sri Lankan Government

By Ashwin Hemmathagama – Financial Correspondent

Colombo, 09 June, (Asiantribune.com): Fuel retailer Lanka IOC Ltd. (Lanka Indian Oil Company Ltd.) filling stations began running out of petrol yesterday, with the Government delaying the subsidy payments.

The government absorbing the shock of increasing oil prices to keep the cost of living down, went on subsidising petrol, diesel and kerosene oil. With this subsidising the total dues to Lanka IOC Ltd. (LIOC) has gone up to Rs. 7.67 billion as of April this year.

Denying possibilities of winding-up of its operations in Sri Lanka predicted by observers, LIOC Managing Director R. Ramakrishna told “Asian Tribune” that the company will be looking at a diplomatic settlement soon.

“We have started to run out of petrol in certain filing stations. Some filling stations will have petrol sufficient for two more days. Diesel supplies will also face the same fate in another week’s time. We have already approached diplomatic avenues in coming to an early settlement. Presently we are looking at signing an agreement for compromised settlement for Rs. 7.4 billion but nothing less,” he said.

Currently there are 162 filling stations serviced by the LIOC, scattered throughout the country which would experience this shortage unless immediate settlements is made. LIOC has 32 per cent market share in the retail fuel segment and 16 per cent and in the lubricant market.

Sri Lanka refines 3.6 million metric tones annually with users guzzling around 30 million litres of petrol, 130 million litres of diesel and 18 million litres of kerosene each month. Currently Sri Lanka imports 70 per cent of its oil requirement from Iran, 19 per cent from Malaysia and 11 per cent from Saudi Arabia at an average rate of US $ 65 per barrel.

However, world oil prices fell under US $ 70 dollars per barrel yesterday, following news of the death of the Al-Qaeda chief in Iraq, Abu Musab al-Zarqawi.

New York's main contract, light sweet crude for delivery in July, slid 91 cents to US $ 69.91 per barrel in electronic deals before the official opening of the US market. The contract earlier touched as low as US $ 69.54, the lowest level since May 25.

In London, Brent North Sea crude for July delivery dropped 84 cents to US $ 68.35 dollars per barrel in electronic trading, after earlier falling to US $ 67.97, last seen on May 22.

- Asian Tribune -

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