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.
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
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.