Sri Lanka sets deadline for Indian Oil to resume sales or face takeover

Sri Lanka sets deadline for Indian Oil to resume sales or face takeover

Sri Lanka has set a 30-day deadline for the local unit of Indian Oil to resume gasoline sales or risk being taken over by the government.

The Lanka-Indian Oil Company, LIOC, which controls a third of Sri Lanka’s retail petroleum business stopped importing gasoline following a dispute with the Sri Lankan government over 71 million dollars.

The LIOC demanded the money as “subsidy payments” for selling fuel at a loss in line with prices specified by the Sri Lankan government. A compromise was reached last month, but LIOC has not yet resumed gasoline sales.

Minister of Transport and Petroleum Development A.H.M. Fowzie decided to take over all fuel retail outlets of the LIOC within 30 days unless they resumed selling fuel, the Sunday Observer said Sunday.

“I have given them an ultimatum of 30 days to import petrol (gasoline) and sell at their outlets,” Fowzie was quoted as saying. “If they fail to comply with my order I’ll be compelled to acquire all (LIOC) outlets.”

An LIOC executive said the company had not been informed of the Sri Lankan government ultimatum, but said fresh stocks of gasoline would arrive next week.

K. Ramakrishnan, managing director of LIOC, said although the payments dispute was settled last month, a formal agreement that would allow LIOC to function freely was pending.

“There are still outstanding matters to be finalised,” Ramakrishnan said. “We are getting a shipment of petrol next week and by early August all outlets will have petrol.”

State-owned Indian Oil is the largest refiner and retailer of petroleum products in Sri Lanka’s northern neighbor India.

The previous government in 2003 handed over a strategic oil storage facility to LIOC in the restive northeast port district of Trincomalee where since December violence has escalated in the island’s long-running ethnic conflict.


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