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SL oil unions demand ouster of IOC

They believe it harms local workers' interest and endangers national security, reports PK Balachandran.

india Updated: Jul 15, 2006 16:59 IST

The Ceylon Petroleum Corporation (CPC) Trade Union Alliance has demanded the ouster of the Lanka Indian Oil Corporation (LIOC) from the Sri Lankan oil retail business, on the grounds that it harms the interest of the local workers and endangers national security.

DJ Rajakaruna of the CPC Trade Union Alliance told Daily Mirror that oil workers would launch an agitation if the Sri Lankan government did not give them a hearing by July 19.

He said that the LIOC (a wholly owned subsidiary of the IOC) was commanding 28 per cent of the local oil retail business and that it was aiming to take it to 40 per cent. The LIOC was aiming at a "monopoly", he charged.

"One should not misunderstand that we are against India or an Indian company. We are against the granting of a monopoly to a foreign company. We do not mind IOC's existence in the country as long as it has no monopoly," he clarified.

Given the volatile security situation in the island, it was extremely risky to let IOC have a monopoly over the local fuel market, he added.

LIOC's decision to stop retailing petrol in its 158 outlets in mid June, following a dispute over the payment of government subsidy to the tune of $70 million, had triggered fears in the minds of Sri Lankans. 

Though the LIOC's case on the subsidy issue is strong and defensible, the unions and the political elite feel that the country is at the mercy of a foreign company in as vital an area as oil.

LIOC allays fears

However, the LIOC CEO, K Ramakrishnan said that the unions' fears were baseless.

Speaking to Hindustan Times Ramakrishnan said that LIOC had only 22 per cent of the market.

As per an agreement with the CPC, the LIOC got one third of its 300 sheds. A third player was to get another third. But there has been a problem in getting a third player.

The principal contenders for the third slot were the Chinese company Sinopec and the Indian major Bharat Petroleum.

Sinopec opted out. And there had been objections to the third player being an Indian company again.

It was felt that two thirds of the government-owned outlets could not be given to Indian companies. Therefore, Bharat Petroleum's dreams of coming to Sri Lanka have remained unfulfilled.

According to Ramakrishnan, as on date, the CPC has 200 sheds under it and 700 under its authorised dealers. The LIOC has 100 under it directly, and 58 under its dealers.

From January 1, 1007, both the CPC and LIOC will be able to expand their dealer network through franchises, though any expansion will have to be sanctioned by the government.

It is the possibility of such expansion by LIOC, which worries CPC workers and Sinhala nationalists.

The CPC workers and parties like the Marxist and Sinhala nationalist Janatha Vimukthi Peramuna (JVP) are anxious that the oil sector should not go into foreign hands.

There is also a fear that foreign companies may change the working conditions to the detriment of workers long used to the laid back regime in the state owned CPC.

Minister's threat to take over LIOC sheds

The threat of an agitation for its ouster from the country is the second major problem faced by the LIOC in July.

Earlier, the Sri Lankan Oil Minister, AHM.Fowzie, threatened to take over the LIOC's outlets if it did not resume petrol supplies in thirty days' time.

The dispute has since been settled through a compromise agreement.

Ramakrishnan told Hindustan Times on Saturday, that oil had arrived at Trincomalee port and distribution would start there soon.

But Colombo and Western province, which are the economic hub of the country, would have to wait until oil had arrived at Colombo port, he said.

Ramakrishnan expected distribution to begin in the capital by August 10.