Lanka IOC PLC reports Rs. 91 m loss due to below cost sale of auto fuels

Lanka IOC (LIOC) has announced a loss of Rs. 91 million for the nine months of FY21 as against a profit of Rs. 768 million on account of under recoveries on sale of petrol and diesel. 

The sales turnover also declined by 23% to Rs. 46 billion during the period from Rs. 60 billion in corresponding period. 

LIOC said the retail selling prices of Auto fuels were last revised in October 2019. The international prices remained highly volatile and increased from bottom of $ 18/bbl in April 2020 to $ 58/bbl in January 2021. However, during this period, Import duties in the form of custom duty and surcharges were increased considerably and these higher taxes have not been passed on to customers. LIOC has contributed over Rs. 17 billion to the Government exchequer in form of duties and taxes during the year. 

“Based on the prevailing international prices of petroleum products, oil companies in Sri Lanka are losing substantially on sales of LAD and LP 92. The recent depreciation in currency has further added to the exchange losses. However, company has performed well in all business segments despite headwinds from COVID-19 pandemic,” LIOC said in a statement. 

It said despite losses and disruptions amidst lockdowns, Lanka IOC has maintained uninterrupted supplies from its sheds. During the period April to December 2020, Lanka IOC could contain the volumes with 2% loss in Auto Fuel segment. Company also commissioned three Nos. new sheds during 2020 and plans to aggressively expand its network of Fuel stations next year. The non-fuel revenue also improved due to solar power generation from 20 Nos. rooftop solar panels installed at Fuel stations.

The company has witnessed increase in volumes in Lubes segments despite tough competition and entry of new players. This was made possible due to expansion of distributor network by six nos. new business tie-ups with Government institutions and OEMs. Company has started blending many new grades in its state of the art plant in Trincomalee which were earlier being imported.  LIOC has incurred major capex at refurbishment of facilities at sheds and maintenance of infrastructure at Trincomalee Tank Farm. The company has sought permission for bringing the technicians for commissioning of first ever grease plant in Sri Lanka which is also expected by March after which the grease shall be manufactured locally and will be cost-effective as compared to imported grease.

The company managed the funds and borrowings through efficient Treasury management thus optimising the finance cost. Lanka IOC Spokesman stated: “The Company is focusing on import substitution for reducing the foreign currency outflow in line with Government of Sri Lanka’s National policy Framework ‘Saubhagya Dakma’ – Vistas of Prosperity and Splendour. Efforts are being made for cost optimisation, rebuilding operations, acceleration of digitalisation, agility and rebuilding confidence among all stakeholders. Irrespective of the challenges, the acompany is very optimistic of revival.”