Subtle Pressure

Lanka IOC, a unit of Indian Oil Corp., has quietly slipped the brakes on its expansion drive, as the Sri Lankan government owes US$ 60 million todate by way of fuel subsidies, a top official said Thursday. Lanka IOC, a unit of Indian Oil Corp., has quietly slipped the brakes on its expansion drive, as the Sri Lankan government owes US$ 60 million todate by way of fuel subsidies, a top official said Thursday. The Indian government and its High Commission in Colombo have also stepped up diplomatic pressure, after back payments ballooned last month.

LIOC’s overdue payments got stuck after PERC (the Public Enterprise Reform Commission), the government’s privatisation arm, wrote on July 12, saying that subsidy will be paid only if the firm makes a loss. The subsidy amount will also be limited to the loss.

However, Lanka IOC, already geared with a 100 percent gearing, is finding it tough to raise extra funds to meet its local operations.

“I don’t have money to expand now, to even buy products or do bunkering. We have stretched our bank borrowings to the maximum and the delay is almost financially chocking our operations,” Lanka IOC Managing Director M Nageswaran told LBO.

As at March 31, 20005