Excise duty on diesel increased to Rs13 a litre; LIOC down 9.7 pct

Aug 26, 2016 (LBO) – Sri Lanka’s government has raised excise duty on diesel by 10 rupees a litre to 13 rupees, the Finance Ministry said in a statement.

Although the excise duty on diesel was raised three days ago, no public announcement was made until Friday.

The share price of LIOC fell to 37.80 rupees, down 9.7 percent, on the Colombo Stock Exchange Friday with 215 million rupees of shares traded, raising questions whether the announcement had been made to the market before the shares were sold.

Bartleet Religare Securities said the hike will erode profit margins of the listed Lanka Indian Oil Corporation.

“LIOC will have to absorb the increased tax amount as a cost since there was no indication of a retail price hike,” Bartleet Religare Securities said.

“Our calculations indicate around a 400 basis points drop in gross profit margin and 750 million rupees bottom line hit per quarter.”