June 9, 2006 (LBO) — Sri Lanka plans to repay millions of dollars due to the troubled fuel retailer Lanka IOC, in cash and bonds to meet immediate purchases of petrol stocks, the Indian firm said Friday. To date, Colombo owes the Indian fuel retailer over 76 million dollars in unpaid subsidies for selling fuel at government controlled rates.
“The settlement will be finalized in the few weeks time. It will be one billion rupees in cash immediately and the rest in two-year bonds,” Lanka IOCs Managing Director K Ramakrishnan told LBO Friday.
“The dispute between both parties is over. We will not get the full settlement, but it’s a start,” he said, adding that the firm has approached a few lenders to advance payments to purchase stocks of petrol.
Sri Lanka, which imports all its oil requirements, forces LIOC and state-run Ceylon Petroleum Corp. to keep pump prices artificially low under an agreement to reimburse the difference at a later date.
However, with soaring global crude prices and a low intensity war simmering in the northeast, the government has been slow to repay, in turn causing cashflow problems to LIOC.
But from the time the one billion rupees is paid, LIOC needs about