Oil Row

June 19, 2008 (LBO) – Sri Lanka has ordered a local unit of Indian Oil Corporation to sell diesel on par with state-run Ceylon Petroleum Corporation or face sanctions, after the Indian firm raised diesel prices in response to a new tax. Lanka IOC raised the price of diesel by 20 rupees to 130 rupees a litre, after the government slapped a special import customs duty on petrol in late May, which is sold at a massive profit by the two fuel retailers in the island.

Lanka IOC imports all its diesel and petrol, while CPC refines half of its products within the country. As a result CPC does not have to pay the duty on all its petrol.

“They [government] have given an advice through a letter, to sell products on par with CPC,” Lanka IOC managing director R Ramakrishnan told LBO.

“We can do that if that custom import duty is removed. We need a level playing field.”

Sri Lanka’s petroleum minister A H M Fowzie had written to the firm that it would face unspecified sanctions if prices were not brought on par with that of CPC, he said.

Fowzie also told parliament Thursday that he may appropriate fuel outlets sold to Lanka IOC if the firm continued to sell diesel at a higher price, media reports said.

Lanka IOC entere