August 23, 2007 (LBO) – Lanka IOC, a unit of the Indian Oil Corporation, has returned to profitability in the June quarter, posting 490 million rupees in profits, interim results filed with the Colombo Stock Exchange showed. .
The firm reversed a loss of 584 million in the same quarter last year.
Part of the losses in the previous June quarter came from a 116 million write off of a subsidy.
Revenues rose to 9.7 billion rupees from 8.9 billion, while cost of sales fell to 8.7 billion from 8.9 billion rupees.
This year the Ceylon Petroleum Corporation, whose pricing Lanka IOC follows, has been adjusting prices quicker to market forces.
CPC has higher operating costs partly due to overstaffing caused by the utility being stuffed with political appointees by successive petroleum ministers over two decades, while Lanka IOC runs a leaner operation.
CPC has raised fuel prices for two months in a row. Under pricing fuel has been identified as a key source of macro-economic instability and inflation in Sri Lanka.
Both CPC and Lanka IOC have been overcharging petrol users far above costs and using the profits to sell diesel below cost. State taxes on petrol are also higher.
Diesel is used by