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Lanka IOC to reach self sufficiency

Lanka IOC PLC will shortly increase the capacity of its $ 5.5 million lubricants blending plant to attain self sufficiency in the local lubricants market by October 2008.

The Trinco plant which commenced operations in November 2007 is now producing 300,000 litres of Servo monthly.


CEO, Ramakrishnan

The monthly demand is 500,000 litres where we import the deficit from the parent company, Indian Oil Corporation’s outlets in Bombay and Madras. The increased capacity up to 600,000 litres will not require Indian imports, Lanka IOC Managing Director/ CEO, Krishnan Ramakrishnan told Daily News Business.

He also explained that the $ 5.5 million (Rs. 500 million) plant did not need additional capital injections for the expansion and added that the factory capacity was already there. The company would be making use of it to reach the set targets by October.

However, Lanka IOC will continue to import small quantities of oil from IOC India, the which are not economical to manufacture in Sri Lanka. He also endorsed that the entry of fellow- Indian Government owned petroleum giant Bharat Petroleum into the Sri Lankan lubricants market recently was no threat to its survival and existence.

Lanka IOC already enjoys a 15 per cent market share in an environment where there are ten competitors in the local market and the addition of one more, irrespective of how big, was not going to make a tangible difference and we would also like them to compete with us”, he said.

Lanka IOC is also waiting the Government nod for the construction and operation of 324 brand petrol sheds countrywide.

These will be costing Rs. 20 million each which will amount to Rs. 6.48 billion. But the actual investment will depend on the actual numbers of petrol sheds that the Government will approve, Ramakrishnan added.

He said that the company was losing Rs. 750 million for April on account of subsidised diesel where it was losing Rs. 31 per litre.

The last revision was on January 14. The current revision was Rs. 80 per litre and the cost is Rs. 111. No industry could afford such a price differential, he said.

The small profit enjoyed by LIOC per litre of petrol was Rs. 6 and if not, the consolidated loss would have been Rs. 900 million for April.

The Lanka IOC petrol stocks were ample where all petrol parcels imported to Colombo were 40,000 tonnes to Colombo every month while the parcels to Trincomalee were 30,000 tonnes per month He said the profitability of the LIOC bottomline was also affected until the price revision was made.

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