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Petroleum retailer Lanka IOC is negotiating with the Public Enterprise Reform Commission (PERC) which is contesting the company’s claim to a petroleum subsidy based on an agreed formula. Indian giant IOC’s local subsidiary is owed Rs. 5.6 billion in overdue subsidy payments up to end June but PERC says the company reported an increased loss during the first quarter of the financial year because international petroleum prices rose sharply in that time.
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Controversy erupted over Lanka IOC’s overdue subsidy payments after the PERC, which carried out the restructuring of the petroleum sector for the government, told the company it is only entitled to a subsidy if it makes a loss.
PERC in its letter sent on July 12 has also produced an opinion from the general supporting its claim.
As part of petroleum sector restructuring which allowed IOC to buy a stake in down stream marketing, pricing was set by a formula that was enforced for 5 years.
If government decides to sell petroleum products bel