In compromise deal, Lanka IOC to get pricing freedom

Lanka’s Treasury to the Secretary (Ministry of Finance & Planning) had offered to implement the liberalisation of price control from June 1, but Lanka IOC sought a deferment until September so as to enable it to “tune to such an era”. ‘‘ It must be done uniformly and simultaneously for CPC (Ceylon Petroleum Corp) and to us, ensuring level playing ground,’’ Lanka IOC MD K. Ramakrishnan wrote to P.B Jayasundera, Treasury to the Secretary.

The request has been acceded to, said IOC officials. ‘‘They (Sri Lankans) are in the process of preparing background paper for the government’s approval,’’ said Petroleum Ministry officials here. Both Lanka IOC and CPC would be taken out of government-controlled pricing mechanism with permission to sell at market prices.

Retail fuel prices are currently governed by a pricing formula pegged to global market prices.

Under the compromise deal, Lanka IOC will take a hit of SLR 2.085 billion ($20.85 million) following a cut in the wholesale profit margin to 1.5% from the 5% agreed on December 30, 2003 with the Sri Lankan government.

Colombo will now pay the remaining subsidy of SLR 5.266 ($52.66 million) in cash and bonds.