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LIOC forced to reduce diesel prices

Under pressure from the SL Govt, LIOC is forced to twice decrease the price of diesel sold from its 153 outlets from Rs 130 per litre to Rs 110 in less than a week, reports Sutirtho Patranobis.

business Updated: Jun 29, 2008 22:22 IST
Sutirtho Patranobis

The office of the Lanka Indian Oil Corporation (LIOC) located on the 20th floor of Colombo’s tallest building has a magnificent bird’s eye view of the city. But the events of the past month, and especially of the last one week, clearly showed that the IOC subsidiary could hardly stay on top of things without being sensitive to the turmoil of the local economy or the twists of domestic politics. Even if that meant incurring losses.

Under pressure from the Sri Lankan government (SLG), LIOC was forced to twice decrease the price of diesel sold from its 153 outlets from Rs 130 per litre to Rs 110 in less than a week. From Friday, LIOC diesel will cost the same as the diesel sold from outlets run by the state-owned Ceylon Petroleum Corporation (CPC).

On May 25, after the Sri Lankan government imposed customs duty on imported petroleum products, the LIOC increased the price of diesel by Rs 0.20 to cover losses sustained on petrol. The government however wanted a level-playing field in the market for CPC and wanted LIOC to reduce the price.

Petroleum minister AHM Fowzie indicated in Parliament last Thursday that the SLG could take over LIOC outlets if it did not bring diesel prices at par with CPC. IN a letter addressed to LIOC managing director, K Ramakrishnan, Fowzie wrote: “if you continue to adopt the same policies, I regret to inform you that I will be compelled to take initiatives that might have negative impact on your business.