Recurring losses compelling price rises in petrol and diesel says Lanka IOC

LIOC has been incurring heavy losses on sale of petrol since January 2015 and diesel since September 2016. LIOC has incurred huge losses during the last 4 consecutive quarters and cumulative loss has touched LKR 1,304 million. Despite prices of petroleum products going up significantly, selling price of petrol & diesel has not been revised which has resulted into heavy losses to oil companies. Increase in taxes and depreciation of Sri Lankan rupee has also significantly affected the margins of oil companies, Lanka IOC said in a press release.

It adds – As on date, crude oil has touched $ 69/bbl and LIOC is incurring a loss of LKR 12/ltr on petrol and LKR 17/ltr on diesel. Due to further increase in prices internationally, company is incurring much more losses during the current quarter January to March 2018. Being a public listed company, with significant minority shareholders, LIOC could not bear any further losses and therefore, company decided to marginally increase the selling prices w.e.f. 24th March 2018. Selling price of petrol has been increased by LKR 9/ltr and LKR 5/ltr on diesel. As diesel is predominantly used more for public transport purposes, LIOC has decided to increase in lesser quantum.

‘When contacted, Managing Director of LIOC informed that although losses are very high, company has increased the prices to the barest minimum and company will still incur heavy losses despite this increase. He also mentioned that the losses have become unbearable and many stakeholders have threatened to stop their transactions with LIOC if such quantum of the losses continues. Till the time, crude oil prices come down to around $ 55/bbl, oil companies will continue to make losses on the fuel imported by them and sold at their petrol sheds unless & until either the selling prices are increased or taxes are reduced.

‘Selling price of petrol & diesel still continue to be very low as compared to the prices prevailing in the neighboring countries as well as prices prevailing in major oil importing countries of the world. LIOC has constantly requested concerned authorities to look into the matter and give relief to oil companies so that their operations remains sustainable. Implementation of pricing formula will immensely benefit the economy of the country as selling prices of petrol & diesel will move in tandem with the international prices and consumers will also get benefit of lower fuel prices whenever prices in the international market comes down’.