Even as it is gasping for breath in a hostile political environment in Sri Lanka, the Lanka Indian Oil Corporation (LIOC) has been subjected to low intensity bomb attacks by unidentified miscreants in the past week or so.
Sri Lankan police are investigating two blasts and the discovery of two unexploded bombs in four petrol stations of the LIOC just outside Colombo.
On August 17, two unexploded bombs were discovered, one at Mt Lavinia and the other at Kadawatta.
About a week or ten days ago, low intensity bombs exploded at petrol stations in Kirillawela and Piliyandala.
"The police were on the spot in minutes and are fully cooperating," Krishnan Ramakrishnan, Managing Director of LIOC told Hindustan Times on Friday.
Asked if the attacks could be attributed to the Ceylon Petroleum Corporation's trade unions, which were wanting the deal with the LIOC to be scrapped and the LIOC ousted from Sri Lanka, Ramakrishnan said that he did not think that this was the work of the trade unions.
He attributed the bombing to small time miscreants.
" Typically, unions would use other, bigger and more effective ways of expressing their opposition, like going on a strike or preventing delivery of supplies to LIOC," he reasoned.
The LIOC is operating in a very unfriendly environment in Sri Lanka, with the present government being none too happy about its presence in the island and the oil unions actually pressing for its ouster.
The LIOC was brought in during the regime of the United National Party (UNP) led by Ranil Wickremesinghe, who is now the Leader of the Opposition.
A long-standing quarrel over subsidies for selling petrol and diesel at an administered price, had led to the accumulation of the subsidy due to the tune of $ 70 million, almost equal to the LIOC's investment in the island.
Unable to operate under these conditions, the LIOC closed its stations over much of June and July this year.
The pumps started functioning after the Sri Lankan government said that it would give $ 10 million immediately and $ 50 million in bonds, and allowed LIOC to fill the remaining gap by fixing its own prices.
The government gave SLRs 700 million, leaving a deficit of SLRs 4.1 billion, Ramakrishnan said.
The LIOC raised the price of petrol and diesel by SLRs 7 per litre, though it would have liked an increase of SLRs 10 to break even.
The state-run Ceylon Petroleum Corporation (CPC), LIOC's rival, was also told by the government that the days of subsidy were over, and was asked to raise its prices.
The LIOC hoped that the CPC would also raise the prices suitably, to make the field level, as was the norm in the oil retail business all over the world.
But the CPC did not raise its prices to the same level. It began selling at SLRs 2 less than the LIOC.
According to Ramakrishnan, this had led to a 50 per cent fall in sales in the LIOC's petrol stations.
Petrol stations of the LIOC and its franchisees, which were already in the red following a lay off of more than a month, got deeper into the red.
The LIOC's share price fell from SLRs 27 to SLRs 24, Ramakrishnan said, a steep fall from SLRs 54 in December 2004.
Asked if the LIOC would be able to survive under such adverse conditions, Ramakrishnan said that there was still hope that the CPC would come round and level the prices.
But the CPC's hands are tied.
It would have to overcome tremendous union and political pressure from the radical Marxist parties like the Janatha Vimukthi Peramuna (JVP), which are very influential in the Mahinda Rajapaksa government.
The Rajapaksa government depends on JVP's support in parliament.
Getting past such pressures is not going to be easy at all.
LIOC to raise prices again
Meanwhile, the LIOC has decided to raise its prices by a further SLRs 7 per litre with effect from September 1, whether the CPC does it or not.
Asked if a further hike would not drive away more customers, Ramakrishnan said that they might still come calling, attracted by LIOC's better service and ancillary facilities like supermarkets and ATMs.
Meanwhile, in the absence of the ratification of the new agreement, the LIOC is still entitled to the subsidy due. There is hope that this will be paid.
"The LIOC is here as a result of a government-to-government agreement and therefore, we are confident that these difficulties will be sorted out in course of time," Ramakrishnan concluded on a note of hope.