Subsidy row: Lanka IOC pumps dry
The company didn't have the money to buy petrol following a row with the Govt on the subsidy to be paid, reports PK Balachandran.india Updated: Jun 12, 2006 12:53 IST
About 160 petrol stations in Sri Lanka belonging to the Lanka Indian Oil Corporation (LIOC) ran dry on Friday, because the company did not have the money to buy petrol following a two-year row with the Sri Lankan government on the subsidy to be paid.
The company was counting on the Sri Lankan government to give it the promised subsidy for selling petrol and other products at uneconomic rates as per government policy.
The subsidy due had accumulated to a whopping Sri Lankan Rupees 70 billion ($ 70 million) over the past two years.
The government and the LIOC had been differing on the rationale behind the subsidy and also the LIOC's accounting procedure.
The government said that subsidy was not due because the LIOC was making a profit. But the LIOC said that it was not making a profit. And at any rate, the subsidy was due for selling petrol at administered prices.
As for the accounting procedure, the accountants were an international company, it said.
The matter was taken up at the highest level at Colombo and New Delhi, but to no avail.
Sources now say that the Sri Lankan government and the LIOC have struck a compromise and that the new formula has gone to New Delhi for the approval of the IOC.
Fuel shortage in Colombo is expected to last for a greater part of the coming week.