LIOC in mega expansion drive

by Lalin FERNANDOPULLE

Foreign energy companies are showing tremendous interest in setting up operations in the country due to the sharp rise in demand for power. In this backdrop Lanka IOC, the Indian oil company is keen to expand its services in Sri Lanka.

Managing Director LIOC, K.R. Suresh Kumar said that LIOC will set up more filling stations islandwide to meet the growing demand for fuel that has sharply increased since the end of terrorism in the country.

"LIOC hopes to increase the number of sheds to around 165 this year from the current 153 stations across the country. We are exploring the possibility of setting up operations in the North which has a huge demand for energy", he said. LIOC commenced operations in Sri Lanka in 2003 and since then has expanded its services from fuel to lubricants and bunkering in the Colombo port.

"Our aim is to launch more products and offer a wide range of services to meet the highest expectation of customers. Customer care has been our prime concern and it has helped position our business well in Sri Lanka", Suresh Kumar said.

LIOC works closely with the Ministry of Petroleum in carrying out business in Sri Lanka. Price revisions of fuel are done in full consultation with the Ministry.

Kumar said the company had to increase the price of a litre of diesel by Rs. 5 due to the loss it was making following the rise in global oil prices since December last year.

He said LIOC was incurring a loss of Rs.15 per litre of petrol and Rs. 17 on a litre of diesel.

We requested the government for a customer duty waiver to facilitate operations but the request was granted after the arrival of imports. LIOC increased the price of a litre of diesel by Rs. 3 and a litre of petrol by Rs. 10 in 2009. The price of a litre of petrol was reduced by Rs. 15 the same year. The current price of a litre of petrol of LIOC is Rs.115 and a litre of diesel with the recent increase is Rs.78.

"The company could not get the benefit of the waiver and as a result the loss to the company was Rs. 220 million. Global fuel prices are rising sharply due to unrest in the Middle East" he said.

The crisis in Libya has triggered a wave of problems in the oil exporting countries and speculation is that output to OPEC would drastically drop due to tensions in oil producing countries.

The current price of a barrel of petrol in the world market is US$ 102 and diesel US$ 121 a barrel.

According to current global oil prices LIOC will incur a loss of Rs.9 per litre of petrol and Rs. 27 on a litre of diesel.LIOC operates an oil storage terminal in Trincomalee and in 2007 the company invested US$ five million on its lubricant plant in the region.

Kumar said that the bunkering business is doing well and added that there has been a 10 percent growth in sales of petrol and diesel since the end of the conflict.