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Our Bureau

Receives compensation for under-realisation in sale of petroleum products

New Delhi , Jan. 9

Indian Oil Corporation Ltd can breath easy now after getting fully compensated by the Sri Lankan Government for losses incurred due under recoveries on selling petroleum products below the cost price in the island nation. IOC's subsidiary, Lanka IOC Ltd, has signed an agreement with Sri Lanka for compensation of its under-realisation in sale of petroleum products.

Settlement

According to a statement issued by IOC here on Tuesday, as per the terms negotiated, a total sum of Sri Lankan Rs 7.41 billion (SLRs 308 crore) was the outstanding under-realisation for the period January 2004 to June 2006, of which a sum of SLRs 2.25 billion (SLRs 93 crore) was received earlier from the Sri Lankan Government.

On signing the agreement, the balance amount of SLRs 5.16 billion (SLRs 215 crore) has been settled in full, with Lanka IOC receiving a cheque for SLRs 700 million (SLRs 29.17 crore) and the balance SLRs 4.46 billion (SLRs 185.83 crore) in the form of Government bonds. These bonds are non-tradable in nature, bearing an interest rate of 11 per cent and a maturity period of two years.

At Colombo, the agreement had been signed by Mr K. Ramakrishnan, Managing Director, Lanka IOC, and Mr Abeysinghe, Deputy Secretary to the Treasury, Government of Sri Lanka . Mr Sarthak Behuria, Chairman, IOC Group of Companies, and other senior officials of Lanka IOC and the Sri Lankan Government were also present on the occasion.

De-regulation

Effective July 1, 2006, pricing of petrol and diesel has been de-regulated in Sri Lanka and the players have been allowed to fix the end-prices reckoning market conditions. Consequently, no subsidy is payable to Lanka IOC by the Sri Lankan Government beyond June 30, 2006.

Lanka IOC is the only private oil company, other than the state-owned Ceylon Petroleum Corporation (CPC), to operate retail petrol/diesel stations in Sri Lanka.

Investments

Lanka IOC is making phased investments to the tune of about Rs 450 crore to provide world-class quality petroleum products and services at the most competitive prices to the Sri Lankan customers.

It took over 100 CPC-owned petrol/diesel stations in February 2003 and commenced retailing products to customers. Subsequently, it took over 59 dealer-owned franchisee retail outlets.

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