Lanka IOC expects fuel price reduction with VAT concession

Hiran H.Senewiratne

Lanka IOC expects local fuel prices to come down by December with the reduction of the VAT from 15 per cent to five per cent.

With the VAT reduction they could reduce Rs 10.30 per litre of petrol, Managing Director Lanka IOC, K Ramakrishnan said yesterday.

Lanka IOC will continue with hedging arrangements with designated banks despite the rise in international crude oil prices.

The company has also already hedged for more than 300,000 barrels from early this year upto now.

Ramakrishnan said the company is dealing with Deutsche Bank, Commercial Bank and the Bank of Ceylon. With the high rise in international oil prices reaching the US $100 mark ,this would not be viable in the long- term perspective, he said.

The company has increased the turnover during this year with the increase of sale prices and volumes. Therefore it has been able to reach a turnover of Rs 20.8 billion, Ramakrishnan said.

He said one of the reasons the turnover has increased compared to last year was that their sheds were closed for more than one and half months due to the non payment of the subsidy by the Government.

He said that with the termination of the government subsidy in last year they became more independent was able to move forward.

The company has turned into a major profit making entity this year.

Lanka IOC will invest Rs 2 billion for 100 petrol fuel stations for which they are awaiting Government approval .

They have short listed 350 from 1000 applications. Out of that they will select the best 100 and the company will invest Rs 20 million each for the structure of such station.

It has an oil storage farm in Trincomalee which they are using them to improve the standards and quality of their company. It also ventures into many new areas like lubricant and bunkering services.