SL to give ultimatum to IOC to sell petrol

Colombo, July 9: Sri Lanka has decided to give an ultimatum to the giant Lanka Indian Oil Company (LIOC) to resume selling petrol within the next 30 days or face the takeover of all 162 IOC retail outlets throughout the island nation.

Petroleum Minister Fowzie confirmed that he has decided to write to the Lanka IOC on the proposed ultimatum and said that he has been forced to take such a decision in the interest of the consumers who have been facing difficulties over the past one month.

''I am going to write to them on Tuesday demanding them to sell petrol in their retail outlets soon otherwise I will take over them and sell our own patrol to the struggling consumers. What is the point in keeping the IOC outlets open without petrol? It is better to take over them,'' Mr Fowzie told UNI over the phone.

The government warning has come within a week after an unannounced visit by the Indian Foreign Secretary Shyam Saran with a special message from Prime Minister Manmohan Singh, urging the Sri Lankan government to offer a meaningful solution through devolution of powers to address the legitimate political aspirations of the minority Tamils in the country.

At present the Lanka IOC operates 162 filling stations countrywide and claims to have a 32 per cent market share in the retail fuel business and 16 per cent in the lubricant market. The Lanka IOC suspended selling petrol in its outlets owing to the fact that the Sri Lanka Government had not paid a mammoth import subsidy to the LIOC.

When asked why the Government had not yet paid subsidy due, to the LIOC, the Minister, said that the parties have already come to an understanding after series of dialogues.

''We have agreed to reduce the outstanding subsidy to the IOC from Rs 11 billion to Rs 7.5 billion. Rs One billion has already been settled with the remaining 6.5 billion to be paid as Treasury Bonds with 11 per cent interest,'' Minister Fowzie said, adding the government has told the LIOC to bring petrol on its own and sell in Sri Lanka at its own price without the government subsidy.

IOC country manager, S Ramakrishnan, who is away in the Southern Tissamaharama district inspecting an IOC outlet, told UNI over the phone that the IOC has not got any ultimatum from Mr Fowzie.

''I have not received any such ultimatum or expected to receive from the Honorable Petroleum Minster. But we are waiting to finalise some amendments to the existing agreement with the Sri Lankan government, which we entered in January 2004,'' Mr Ramakrishnan said.

According to the proposed amendment, Mr Ramakrishnan said that the LIOC has to bring petrol without the Sri Lankan government subsidy and sell it accordingly.

''In such an event, we will have to sell it in a higher price in the local market than that of the Ceylon Petroleum Corporation, which is not a viable alternative. That's why we have proposed a common market price considering all these adjustments and the Sri Lankan government has agreed to it,'' Mr Ramakrishnan said.

He said although, there was an understanding between the two parties, an amended agreement is yet to be signed for the LIOC to resume selling petrol in its outlets.

''The government has submitted its draft amendment, but it is little vague. We have also submitted our draft amendment. I am hopeful that we will be able to settle it within a week,'' Mr Ramakrishnan said.

''The IOC was brining in a shipment of patrol to the Trincomalee harbour next week for supply without waiting for the signing of the agreement,'' he added.

''The tanker is already being loaded in India and is expected to arrive in the Trincomalee harbour within the next four days.

Within a week we will be able to supply petrol in our outlets. We are bringing in another shipment of petrol to the Colombo harbour during the first week of next month,'' LIOC country manager said.

UNI