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Dire Straits

May 23, 2006 (LBO) – Cash strapped retail fuel supplier Lanka IOC has put a break on future imports, citing an unpaid 7.44 billion rupee subsidy payment at the centre of a dispute with the government.

A unit of the Fortune 500 Indian Oil Corp., Lanka IOC says they have sufficient stocks to cover 43 days of diesel and 18 days of petrol.

Thereafter, our petrol stations may go dry of petrol and diesel, in case the government of Sri Lanka does not settle our dues on an immediate basis, LIOCs Managing Director K Ramakrishnan told LBO Tuesday.

We are a commercial organisation, not a funding organisation for the government¦.if they [government] wants us to be in business, they must repay us, he said.

Last week, Lanka IOC reported a net loss of 7.07 billion rupees or 68.7 million US dollars for the 2005/6 financial year.

Ramakrishnan says they would have posted a 375 million rupee profit for the year ended March 31 had the subsidy, which has gradually built up since January 2004, been repaid.

We are drowning now, laments Ramakrishana, who says the firm is unable to service debts borrowed from banks to date, to fund imports of petrol and diesel.

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