Almost 75 per cent of Lanka IOC Plc's petrol and diesel demand for the first six months of the current fiscal has been met by Reliance Industries Ltd (RIL) led by Mukesh Ambani.
“For the first six months, of the 300,000 tonnes of products imported almost 225,000 tonnes have come from RIL,” Mr K.R. Suresh Kumar, Managing Director, Lanka IOC, told Business Line.
“In 2008-09 we had imported 550,000 tonnes of products of which 30-40 per cent came from RIL. Sri Lanka has just one refinery (owned by Ceylon Petroleum) with a capacity of 2 million tonnes, and the demand is close to 4 million tonnes for all petroleum products. Thus, to meet the balance demand we had to import.”
Reliance operates two refineries in Jamnagar -- one with capacity of 33 million tonnes and the other of 27 million tonnes.
Declining to share the numbers at which Lanka IOC sources these products from RIL, he said, “Lanka IOC procures through a tendering process and RIL has bagged orders against tenders. It is at a very competitive price.”
Lanka IOC sells auto fuels through its 151 retail outlets with plans to add 20 during the current calendar year. On how much is the company's performance impacted by the volatility in international crude prices, he said, “The performance is affected. As there is not much of storage capacity in the country, we have to import more frequently resulting in high costs.”
Besides, the company also incurs revenue loss on sale of petrol and diesel as the price is fixed by the Sri Lankan Government. “Though there is constant interaction between the Government and the companies the prices are not completely in sync with international prices,” he said.
Currently, petrol is sold at Sri Lankan Rs 115 a litre (Indian Rs 50 a litre) and diesel is sold for Sri Lankan Rs 73 a litre (Rs 30 a litre). The revenue loss on petrol is Sri Lankan Rs 8 a litre and on diesel is Sri Lankan Re 1 a litre.
The company has no plans to enter the cooking fuel (domestic LPG) retailing business, he said. “For Lanka IOC the main revenue generator has been the retailing business. But now there is a conscious effort to change it by diversifying into bunker fuels and bitumen.”
On if the company has any plans to set up a refinery in Sri Lanka, he said, “It will not be economically viable.”
The company recently got Govt concessions for exports and is looking at exporting lubes to West Asia, Singapore, and Maldives.
Source:http://www.thehindubusinessline.com/2010/02/22/stories/2010022250900200.htm
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