Hot Water

Retail fuel giant Lanka IOC Ltd reported 69 percent drop in second-quarter earnings on Friday as government imposed subsidies and record world crude prices erased profit margins.

Retail fuel giant Lanka IOC Ltd reported 69 percent drop in second-quarter earnings on Friday as government imposed subsidies and record world crude prices erased profit margins. Lanka IOC – a unit of Indian Oil Corp.





, -- said in a statement it made a Rs.



175.1 million net profit in the three months ending Sept 30 against Rs.





564.0 million in the same period of 2004.

"The fall is due to local fuel prices not adjusted to keep pace with skyrocketing world oil prices," Hasitha Premaratne, Head of Research HNB Stockbrokers told LBO.

Over the six month period under review, the Sri Lankan government owed LIOC Rs. 6.495 billion in subsidy payments, and only Rs.

400 million had actually been paid so far, LIOC's statement said.

"The unpaid subsidy bill is worrying, because the cash pile could have been used to expand the business and develop their bunkering plans," says Premaratne.

Sri Lanka imports all its oil requirements, and surging world prices will leave the country with a US$ 1.

2 billi