Lanka IOC says selling petroleum fuel items below cost is putting pressure on the company’s financial situation and urges the government to intervene to revise the petroleum prices.

Its Managing Director Suresh Kumar in an interview with www.news360.lk said the situation has become very difficult and the company’s borrowings have risen sharply thus putting pressure on servicing its debts.

However Kumar said despite the difficulties the company is continuously working towards expanding its business in the country as it sees greater growth potential in the local petroleum sector.

Following is the full interview we had with Mr. Suresh Kumar:

1.)    To start with, we have been observing you and your executive team often traveling   to Trincomalee since the end of the conflict, what plans you’re coming up with for Trincomalee?
   
 A: Lanka IOC operates the Trincomalee storage terminal and Lube Blending Plant. We have been upgrading the infrastructure at Trincomalee. In the last seven years we have invested more than USD 11 million in developing tankages, gantry , pump house, Quarters , pipelines, roads, etc. in addition to setting up a state of art Lubricants blending plant. Recently we have refurbished the oil jetty at a cost of USD 0.45 million. We have undertaken a study to assess the condition of the other tanks, pipelines etc and estimate the cost for repair/refurbishment, creation of new facilities   and providing safety and fire fighting systems. We intend to start the work in about 6 months. We feel the country needs the infrastructure to meet the growing demand for petroleum products and Lanka IOC will work towards providing it.
     

2.)    You recently started exporting lubricants, can you tell us what markets you export and what is the growth forecast for the particular product range?
   
A: We commenced our exports recently and consignments have been sent to Cameroon, Nepal and Mauritius. We are stepping up our exports and would like to target about One million liters in the current year to these countries as well as other African countries and Middle East.

3.)  You have been consistently asking the government to consider the current petroleum prices such as petrol and diesel, however no action has yet been taken, how difficult the situation is?
 
A: The situation has become very difficult. We are repeatedly bringing to the attention of the Govt. the problems faced by Lanka IOC and seeking their urgent intervention in revising the prices. Our borrowings have risen sharply and servicing the debt could be difficult.

4.) Does the Government subsidies LIOC or has it impacted your finances?
 
A: The Govt. does not subsidies our operations .

5.) How this situation has impacted the Lanka Indian Oil’s share prices in the stock market?
 
A:  The investors have confidence in Lanka IOC. They are hoping that situation will improve in the short term and the company will perform to its potential.

6.) Despite such issues, you seem to be taking the Sri Lankan market very seriously, where does LIOC wants to be in five years from now onwards?
 
A:  We believe that Sri Lanka has good growth potential and we see the signs already. We want to play an active role in the development of petroleum sector in Sri Lanka and reach out to all segments of the society. Bringing world class experience to our customers is one of our key objectives.

7.)   Talking about general matters, since the end of the conflict, what is your view about the path the country is taking towards achieving economic growth?
 
A: Growth prospects are very good.  Government is taking several initiatives to promote investments in the key sectors of the economy and focus should be on development of infrastructure. We expect the targeted growth rates to be achieved as per the time table of the Govt.

8.)   What reforms you think the government should bring into help businesses grow here

A:  Promoting private sector investments through appropriate policies is extremely important. Key projects may be cleared through “single window” mechanism to avoid delays. This will trigger more investments as investor confidence will get a boost.

Interviewed by: Prasanna C. Rodrigo / Email him on: news360@sltnet.lk

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