Unable to revise fuel prices, Lanka IOC suffers Rs. 787 m loss in two successive quarters

Monday, 28 August 2017 00:10 - - {{hitsCtrl.values.hits}}

At present petroleum companies are losing Rs. 14/Ltr on petrol and Rs. 8/Ltr on diesel

Lanka IOC PLC has reported a net loss of Rs. 135 million for the quarter ended 30 June 2017 on the back of Rs. 652 million loss in the quarter ended in March 2017.

The losses have been attributed to negative margins on the sale of petrol and diesel. Currently the petroleum companies are losing Rs. 14/Ltr on petrol and Rs. 8/Ltr on diesel.

LIOC officials said that it is very difficult time where the company has to continuously sell petrol and diesel below the cost of procurement. Losses could have been much higher, but the company has managed positive margins on other business segments.

The officials said that despite incurring loss on every additional litre of petrol and diesel sold in the market, LIOC has continued selling auto-fuels. During the strike period also, irrespective of the fact that LIOC was making losses on higher sales, the company continued to sell higher quantity of petrol and diesel. More sales volume has resulted into higher losses.

The officials also revealed that during April-June 2017, LIOC paid approximately Rs. 6.2 billion to the Government Exchequer, which is almost one-third of the turnover.

The current market prices of Auto fuels were last revised in January 2015. Since then the crude oil prices have moved in the range of $30/bbl to $60/bbl till date but selling prices have remained the same. Further, during this period, taxes have been further increased but retail selling prices have not been increased.

Oil companies have to bear the burden of exchange loss too due to steep depreciation of Sri Lankan Rupee by almost 18%.

The issue of implementation of appropriate pricing mechanism in the country has been continuously taken up by LIOC with the Government of Sri Lanka.

Recent reports indicates that now IMF is also following-up with the Government of Sri Lanka to carry out this key energy sector reform on priority as it will benefit the Government and oil companies and will also be significantly beneficial to the economy of Sri Lanka.

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