The Indian oil company operating in the country yesterday said the Government must make necessary adjustments in line with global price fluctuations.Lanka IOC Managing Director Suresh Kumar told Daily FT that although the VAT on petrol, turnover tax and Social Responsibility Levy (SRL) had been removed, minor losses would continue to be incurred.
Kumar said that the Customs Duty imposed on petrol at Rs. 15 and diesel at Rs. 4 would adversely affect the company.
LIOC is set to incur a minor loss of Rs. 2 on petrol and approximately Rs.8 on diesel in this respect, he said.
Furthermore, the increase in the price of crude oil which was likely to rise further would require a surge in petrol and diesel prices in the Sri Lankan market, he said.
“If this continues then we will have a problem at hand,” he noted, since the higher cost of petrol and diesel would result in a higher loss for LIOC.
In such a scenario, the domestic selling price would be hard to match, LIOC said.
Kumar further pointed out the Government needed to keep a check on the price and initiate necessary adjustments as and when required in line with global price increases.
These requests have already been made to the Government and LIOC is awaiting action to be initiated by the Government in this regard.
Oil ‘to surge above $120 by 2012 end’
OIL will breach through $100 a barrel in the first half of 2011 and $120 before the end of 2012, said JP Morgan, predicting Opec will be very slow to react to a price spike.
‘The current policy-related surge in Chinese oil demand is likely to fade early in the first quarter, but ongoing strength in Emerging Market oil demand over the next 24 months is seen lifting the call on Opec production to levels last seen at the peak of the oil price spike in 2008,’ analysts at JP Morgan said.
‘We think Opec is unlikely to raise output ahead of its June 2011 meeting unless oil prices push above $100/bbl, leaving inventories to draw over the first quarter, pushing Brent crude oil into backwardation - a structure that is likely to remain in place for much of 2011 and 2012’.
‘As such, we continue to stress that the recent pull back in oil prices offers an opportunity for consumers to reinstate their hedges, with the flat structure in the back of the Brent curve providing an attractive entry point.’
‘Similarly, investors should look to move their positions to nearby months,’ the analysts said.-Reuters