September 26, 2006 (LBO) – Lanka IOCs share prices perked up Tuesday after the Indian fuel retailer announced plans to ink a deal next week, which settles billions of rupees due from the Sri Lankan government. “Our ‘settlement agreement’ with the government of Sri Lanka on resolving the long pending subsidy issue is planned to be executed during the first week of October,” LIOC Managing Director K Ramakrishnan said.
LIOCs share price advanced 2.8 percent or 75 cents to 27.50 rupees on the announcement on trading volumes of 822,400 shares.
A unit of the Fortune 500 Indian Oil Corp., Lanka IOC has been drowning in red ink as Colombo failed to settle 7.6 billion rupees in subsidies for selling fuel at government controlled prices.
Last month, the fuel retailer reported a 584.0 million rupee net loss for the three months to June, citing unpaid subsidy payments of 116.0 million rupees from Colombo.
Sri Lanka agreed to settle the bills in a combination of cash and bonds and LIOC was in turn allowed to set its own retail prices across their 160 fuel sheds from July 1.
Ramakrishnan did not disclose details, but the settlement includes aborting LIOCs agreement with Colombo due to end in 2008 an