LIOC refutes tax evasion allegations

by Gamini Warushamana

Lanka Indian Oil Company (LIOC) denied allegations levelled against the company by Ceylon Petroleum Corporation (CPC) trade unions and said that LIOC pays all due taxes to the Inland Revenue Department before unloading the imported fuel.

Nobody can import petroleum into the country without paying taxes in advance and LIOC pays a day before unloading, Managing Director of the LIOC K.Ramakrishnan told the Sunday Observer. He said that some media abuse press freedom and publish 'sensational' reports about the LIOC. LIOC does not carry out any unethical practices, he said. Whether it is imported via Colombo port or from Trincomalee, the tax procedure is the same and all petroleum importers have to fall in line, Ramakrishnan said.

CPC trade unions accused that LIOC had defaulted Rs.12.5 billion as tax payments to the government.

Unions continue questioning LIOC operations in Sri Lanka and said that Sri Lankan authorities are taking decisions for personal gains and not for the country. CPC Common Service Union said that LIOC owes Rs.12.5 billion as taxes to the government while government is paying interest at 11% for Rs. 4,960 million government owes to the LIOC as outstanding subsidy payments. Unions have complained to the Auditor General to investigate the issue.

The money is tax revenue already collected from the consumers, CPC Common Service Union representative said. Acting Auditor General W.D.Hemarathne said that he had received a complaint and investigations are in progress but refused to comment further.

CPC Common Service Union also said that all decisions taken by the authorities give more and more privileges to the LIOC and thus the competitiveness of the CPC to deteriorate in the market. Government has decided to end the share sales and purchase agreement with LIOC by December 31, 2006 while it was to lapse by December 2008.

With the termination of the agreement, LIOC gets huge benefits and it can supply fuel at highly competitive price than the CPC. LIOC can now get oil from China Bay oil tanks of the IOC and this would reduce LIOC fuel cost by $1.14 per tonne which pays as throughput charge when it imports oil via Colombo.

Freight charges of Colombo port is $3 per tonne and for China bay oil it is $ 0.26 per tonne. With the termination of the agreement LIOC is permitted to open new filling stations and this would increase the market share of the LIOC, he said.