The government has also upped the Port and Airport levy from 2.5 percent to 3 percent with effect from January next year, which will also affect earnings.
"Based on the current exchange rates and estimated base oil prices for 2007, these changes to the tariff structure is expected to negatively impact on the earnings of Caltex Lanka Lubricants to the extent of about 300 million rupees before tax and 195 million rupees after tax for the year 2007," the company said in a statement to the Colombo Stock Exchange.
Base oil prices currently range between 900 to 1300 dollars a tonne, differing based on the type of grade sold.
The company is yet to take a decision on raising product prices to cope with the increased cess and taxes, Kishu Gomez, Managing Director of Caltex Lanka, told LBO.
The local lube market is valued at about six billion rupees and is expected to grow about 4-5 percent this financial year, Gomez said.
Caltex Lanka, which is 51 percent owned by Chevron Texaco, has over 80 percent of the local market, manufacturing as well as importing lubricants for local sale, also exporting to Bangladesh and the Maldives.Caltex shares the lubricant market with Indian Oil Corp., Servo, Mobil, Valvoline, British Petroleum/Castrol and Shell.