August 07, 2007 (LBO) – Indian Oil Corporation (IOC) may put off overseas expansion following its experience in Sri Lanka where it lost money after being forced to under-price fuel and government subsidies got delayed, Indian media reported. State-owned IOC is delaying an entry to Malaysia and Indonesia where oil subsidies are also in place, fearing a repeat of its Sri Lanka experience while US and European markets also had limited potential, India’s Business Standard newspaper said.
“Our experience in Sri Lanka has forced us to reconsider the plans of starting retail operations in south-east Asia as auto fuels are subsidised in these countries,” the paper quoted a senior IOC official as saying.
“We do not want to get caught in the subsidy web again.”
The paper said IOC is “facing troubles in Sri Lanka”, one of the two overseas markets where it sells fuel through its fully owned subsidiary, Lanka IOC. The other country is Mauritius.
Lanka IOC has a third of the retail fuel market in Sri Lanka, and the state-owned Ceylon Petroleum has the balance.
Lanka IOC made a loss of 636 million rupees for the full year to March 2007 with revenues at 32.7 billion rupees.
It had revenues of 37.4 billion in 2006 and m