Desperate Times

June 06 (LBO) – Lanka Indian Oil Corporation has asked the Treasury for a billion rupees of its unpaid subsidy bill to buy fuel, as petrol stocks threaten to run dry in two days.

The government owes the company Rs. 7.44 billion in unpaid subsidies as at end March this year, with the firm saying it can no longer service its bank borrowings taken to import fuel.

The local arm of the Fortune 500 Indian Oil Corp., LIOC expects the Treasury to cough up the one billion rupees this week.

The firm is also in talks with the Treasury to decide on a compromise settlement for the balance, though no date has been fixed as yet for repayment.

We have asked the Treasury for one billion rupees of the settlement that is being negotiated to keep supplies available, LIOCs Managing Director K Ramakrishnan told LBO Tuesday.

Our fuel sheds have petrol only for another two days and diesel for about another 35 days. But from the time the one billion rupees is paid, it will take about ten days for sheds to be re-stocked, Ramakrishnan said.

Last month, Lanka IOC reported a net loss of 7.07 billion rupees or 68.7 million US dollars for the 2005/6 financial year.