Sri Lanka: LIOC Threatened With Nationalisation
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Wednesday, 25 June 2008 |
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The authorities in Sri Lanka has threatened to nationalise the local
unit of Indian Oil unless it reduces the retail price of diesel.
Petroleum Minister A.H.M. Fowzie said the government will take over
the 160 fuel retail depots operated by Lanka IOC, the local subsidiary
of India's state-owned Indian Oil Corporation (IOC), unless it makes
the reductions.
Diesel is commonly used by public transport. "Steps could be taken to
re-vest the filling stations given to the IOC," the minister was quoted
as saying in local media.
Sri Lanka sold a third of its petroleum distribution network to the IOC
in 2003 as part of a move to end the monopoly on retail sales. While
the state-owned Ceylon Petroleum Corporation (CPC) sells diesel at 110
rupees (1.02 dollars) a litre, the IOC sells it at 130 rupees. The CPC diesel is subsidised by the state.
The government argues more motorists are buying the subsidised diesel
and as a result increasing losses incurred by the state. Lanka IOC said
they were not able to absorb losses by selling diesel at the
same price as CPC. "The minister... wrote to us last week, asking
us to reduce our diesel prices to the same (level) as CPC or face
sanctions," Lanka IOC Managing Director, K. Ramakrishnan told AFP. "We
have told the minister that we can reduce diesel prices if the
government removes taxes."
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