LIOC stumbles by selling cheaper fuel

May, 19, 2015

Lanka IOC (LIOC) which showed profits of Rs. 722 million during the first quarter of 2014 has recorded a loss of Rs. 1.06 billion during the March quarter of 2015 in the face of the fuel price reductions by the government, reveals its annual report.

In January this year the government reduced the prices of petrol by Rs. 33 per litre and diesel by Rs. 16 per litre even as the price of crude oil was USD 45 per barrel in the world market.

Accordingly, LIOC has incurred a loss of Rs. 2 per share.

LIOC had recorded a profit of Rs. 610 million during the December quarter of last year.

During the March quarter of this year, LIOC revenue stumbling by 25 per cent to Rs. 15.8 billion is a significant feature.

Though world crude oil prices were at the USD 45 per barrel level last January, the current rise to USD 65 per barrel and the government not proportionately increasing the fuel prices are the main reasons for this loss.

Meanwhile, though the Ceylon Petroleum Corporation (CPC) has recorded a loss of Rs. 4.0 billion during the first quarter of 2015, a fuel price hike is extremely unlikely since the government expects to go for an election soon.

Economic experts point out that deciding on fuel prices according political necessities should be stopped and instead the introduction of a pricing formula is a timely need.

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