Lanka IOC, a wholly-owned subsidiary of Indian Oil Corporation, will introduce for the first time in the Sri Lankan market, Euro III grade petrol in about a fortnight.

Lanka IOC and Ceylon Petroleum Corporation have a duopoly on retail petrol and diesel sale in Sri Lanka.

The Lanka IOC Managing Director, Mr K.R. Suresh Kumar, said that since there was a large number of premium cars and SUVs on the roads, there existed a ready market for higher quality petrol. The company, which sells normal (90 Octane), premium and 95 Octane petrol here, plans to replace its premium brand petrol with Euro III standard petrol.

“We also plan to introduce Euro-IV standard petrol in about three months,” he said.

Apart from the ready market, Lanka IOC also feels that its presence in the premium segment – where there is no competition right now – will also mean that it can shore up its margins.

Lankan IOC looks to offset its losses suffered as a result of selling diesel at LKR 84 from the sale of these premium products, and from bunkering and bitumen operations. Earlier, Lanka IOC had unilaterally hiked diesel prices a few months ago by LKR 5, after an appeal it made was not heeded. This led to a dramatic decline in sales. But with the recent hike in prices of petrol, diesel and kerosene announced by the government, prices of Lanka IOC and CPC will be at the same level.

“We expect many customers to come back to us. We will lose about LKR 13 to LKR 14 for each litre of diesel we sell,” said Mr Kumar. Lanka IOC is expected to sell 26-27 million litres of diesel, compared to about 18 million litres of petrol. In this situation, Lankan IOC will require its premium and other operations to bring in profits to offset the heavy losses in diesel selling.

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