LIOC with 18% market share earns profit of Rs 200 mn; CPC suffers loss of Rs. 13 bn

By Maheesha Mudugamuwa

Lanka Indian Oil Company (LIOC), which has a 20 per cent market share has earned a net profit of about Rs. 200 mn while the Ceylon Petroleum Corporation (CPC), which has 80 per cent of market share has incurred a loss of about Rs. 13 billion.

LIOC Managing Director Shyam Bohra told The Island that the latest statistics of the company showed that it had earned a net profit of about Rs. 200 million, while its total market share was around 18 per cent.

According to the LIOC statistics, the company had earned Rs. 1.8 billion net profit at the end of March 2015. But it came down dramatically to Rs. 171 million within three months upto June, 2015 due to sharp drop in retail selling price of auto fuels coupled with increased duties imposed by the government last year.

Welcoming the Government’s move, LIOC MD Bohra requested Sri Lanka to bring in a new fuel pricing formula where prices would adjust in line with world market trends soon.

However, Ceylon Petroleum Corporation (CPC) Chairman P. G Jayasinghe said though the corporation had about 80 per cent market share in the country it was running at a huge loss and couldn’t earn profits.

He stressed that the CPC had to pay about Rs. 1,200 million as interest to government banks every month. It had incurred a loss of Rs. 2.4 billion due to debts to state banks, he said.

Commenting on the proposed pricing formula, Jayasinghe said it had already been submitted to the Cabinet.

Asked whether the formula would be presented soon, Chairman said that he couldn’t give an exact time period.

Asked why CPC couldn’t earn profits, the Chairman said, "Unlike LIOC, CPC has social obligations. LIOC is a private company and its aim is to earn profits. They have fewer workers than we. The CPC has 3,670 workers. It is a government institution."

Meanwhile, the Head of the CPC branch of the Jathika Sevaka Sangamaya (JSS) Ananda Palitha said the LIOC was planning to increase its retail market share in the Northern and Eastern provinces. Palitha attributed the Indian investment in the petroleum sector as the cause of the rapid collapse of the CPC.

Palitha said: "In other countries that have more than one petroleum company retail prices vary. If there are five companies they have five different retail prices. To promote their businesses they also provide other services at their filling stations. But, in Sri Lanka both private and government institutions have the same retail prices. The government owned CPC incurs losses due to its debts, while LIOC earns huge profits selling their products to Sri Lankans."

"This situation should be changed. The government should establish an open pricing regulatory commission and they should introduce a proper pricing formula," the union head said.

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