LIOC incurs Rs 6 loss per litre on diesel - MD
Lanka Indian Oil Company (LIOC) loses about Rs 6 per litre of diesel
and the loss per month for the company from diesel is around Rs. 50
However, the company earns profits from petrol, lubricants and other
petroleum products and will further diversify its products portfolio to
increase profits, Managing Director of LIOC, Subodh Dakwale told a press
conference in Colombo last week. Dakwale said that in the first six
months of 2012 the company earned over Rs.1.5 billion in profits due to
prudent financial management and efficiency. Just-in-time purchasing,
better inventory management and taking maximum advantage of
international price declines contributes to the overall profit of the
company even though it loses from diesel.
As LIOC sells a litre of diesel at Rs. 6 higher than that of the CPC
(Ceylon Petroleum Corporation) at its filling stations its share in the
diesel market has come down from 14 percent to eight percent after the
price increase, he said.
LIOC's market share in petrol is around 18 percent and the company
owns nearly 16 percent of fuel outlets in the country. Dakwale said that
the shipment of diesel which had been held up at the Colombo port are
not substandard diesel and it meets all major specifications. However,
in the quality test it was found to be off specification in colour and
appearance and not in core chemical properties.The supplier Glencore
Singapore (Pte) Ltd was awarded a contract to supply 7,562 tonnes of
diesel of which 4,712 metric tonnes was to be discharged in Colombo and
2,850 metric tonnes in Trincomalee.
In Trincomalee LIOC has its own testing lab and in Colombo testing is
done at the Ceylon Petroleum Storage Terminals Limited, a facility used
by state-run Ceylon Petroleum Corporation and LIOC.In some countries
colour is not a criteria and in Sri Lanka till August last year there
were no criteria for colour, officials said.
Dakwale said in other critical parameters its sulphur content was
only 1,440 parts per million when the requirement was 2,550 parts per
million. He said that LIOC does not sell products that are below
specifications. He said that even though the company made losses in
diesel this issue had not affected its diesel sales and stocks are
borrowed from the CPC. Meanwhile, sources said that the state-owned CPC
incurred a staggering Rs. 90 billion loss and the authorities claim
different reasons; the subsidised petrol and diesel price, supply to the
Ceylon Electricity Board (CEB) for thermal power generation and supply
to loss-making airlines.