Cash strapped Sri Lankan unit of Indian Oil Corporation on Tuesday announced it will not replenish stocks unless the Sri Lankan government moved to settle a disputed Rs7.44-billion subsidy claim.
A unit of the Indian Oil Corportaion, Lanka IOC, had sufficient stocks to cover 43 days of diesel and 18 days of petrol requirements and no plans to replace the stocks, Lanka Business Online website reported.
"Thereafter, our petrol stations may go dry of petrol and diesel, in case the government of Sri Lanka does not settle our dues on an immediate basis," LIOC managing director K Ramakrishnan said.
"We are a commercial organisation, not a funding organisation for the government. If they (government) want us to be in business, they must repay us," he was quoted as saying by LBO, a top businessnews website in Colombo.
Lanka IOC reported a full-year net loss of Rs 7.07 billion or $68.7 million for the year ended 2005/6 last week.
Ramakrishnan says they would have posted a 375 million rupee profit for the year ended March 31 had the subsidy, which has gradually built up since January 2004, been repaid.
"We are drowning now," laments Ramakrishana. "We have no further intension of borrowing from banks beyond our capacity to service the loans, which might endanger our financial credibility."
LIOCs re-imbursement claims are being disputed by the government's privatisation arm Public Reform Enterprise Commission, through a legal opinion from the attorney general's department.
While the company is contesting PERCs opinion, Ramakrishnan down played plans to wind up operations. "We have no such plans of closing down the company in Sri Lanka, but however, we may end up with the business coming to a hold due to dry out of petroleum products," he added.
To date, the treasury has settled around Rs 1.7 billion, with the last payment coming in March.
LIOC has a 32 per cent share of the retail fuel market {operating alongside state oil giant Ceypetco) as well as a 16 per cent of the lubricant market, since it began operations in February 2003.
Lanka IOC is 75 per cent-owned by Indian Oil Corporation, with the remaining 25 per cent listed on the Colombo Stock Exchange.
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