New Delhi -°C
Today in New Delhi, India

Sep 22, 2020-Tuesday



Select Country
Select city

Year starts off well for Indian business in Lanka

The Lanka Indian Oil Corporation won a two-year battle to get the promised subsidy from the government, reports PK Balachandran.

india Updated: Jan 12, 2007 14:26 IST
PK Balachandran
PK Balachandran

The New Year started off well for Indian business in Sri Lanka with the Lanka Indian Oil Corporation (LIOC), winning a two-year battle to get the promised subsidy from the Sri Lankan government.

Earlier, to everyone's surprise, Apollo Hospital had come back to the island after being shunted out through a hostile take over by a politically influential local corporate raider.

Both LIOC and Apollo Hospital had raised the bar in Sri Lanka in their respective fields.

But when the LIOC was emasculated by the non-payment of the promised dues, and Apollo was allowed to be taken over, it was thought that Sri Lanka was not a good destination for Indian investors.

On Friday, the LIOC and the Sri Lankan government signed an agreement whereby the LIOC would be paid the full subsidy of SLRs 5.16 billion ($48 million) for the period January 2004 to June 2006.

Since July 1, 2006, the LIOC had not been eligible for subsidy as the government had allowed it to fix its prices.

As per the agreement now made, SLRs 700 million was paid by cheque and the SLRs 4.46 billion was given in the form of a government bond.

This non-tradable bond is to carry an interest of 11 per cent and mature in two years.

Speaking to Hindustan Times, the LIOC Managing Director K Ramakrishnan said that constant efforts to get the dues over the past two years, had borne fruit at last.

The subsidy promised by the government was critical for the LIOC as petrol and diesel prices were fixed by the government leaving the oil companies no room for managing increases in the price of oil in the world market.

Following the agreement, the LIOC increased the price of petrol by SLRs 5.

In November 2006, Apollo Hospital Chairman Pratap C Reddy and the Sri Lankan corporate raider Harry Jayawardene signed an agreement in Chennai for technical cooperation in running the state of the art Apollo Hospital in Colombo.

The hospital, taken over by Jayawardene's Sri Lanka Insurance Corporation earlier that year, would continue to use the name Apollo on payment of a royalty, and the Indian doctors and other personnel would continue to be associated with the institution.

The management of the hospital, would, however, be in the hands of the Sri Lanka Insurance Corporation, the new owner.

Local observers say that Harry Jayawardene is known to be a man with the Midas touch, and that the hospital under him should do well financially even as it has Apollo's world class expertise in healthcare.

Sign In to continue reading