Energy: Sri Lanka renews Lanka-IOC petroleum license for 20 years
Virendra Pandit
New Delhi: Sri Lanka has renewed the Lanka-Indian Oil Corporation (LIOC)’s petroleum products license for another 20 years.
The Lanka-IOC is the local subsidiary of the IOC in the island nation next door to India.
The media reported on Monday that the license, originally issued in 2003, was to expire in January 2024. Its renewal will allow Lanka IOC to continue its retail operations in the debt-trapped island nation until January 22, 2044.
It was through the Lanka-IOC that New Delhi rushed petroleum to Sri Lanka when it faced an acute fuel and financial crisis in 2021, that triggered a long-drawn-out political upheaval in that country.
President Ranil Wickremesinghe presented the license renewal letter to Dipak Das, LIOC’s Managing Director, Aseem Bhargav, the Chief Financial Officer of LIOC, said in a statement.
The license enables LIOC to import, export, store, transport, distribute, sell, and supply petrol diesel, heavy diesel, furnace oil, kerosene, Naphtha, and other mineral petroleum, including premium petrol and premium diesel.
The LIOC holds around 20 per cent of the market share in the auto fuel segment in Sri Lanka.
When Sri Lanka plunged into a severe economic crisis with no forex to import petroleum products, the LIOC’s operation became crucial in the energy sector. It operates over 200 retail outlets throughout the island nation.
Since the economic crisis bitten Sri Lanka, it has liberalized the energy sector.
China’s Sinopec entered Sri Lanka in August as the third player in the retail fuel trade while USA’s RM Parks and Australia’s United Petroleum are also due to commence operations soon, the media reported.
However, the main opposition party Samagi Jana Balawegaya (SJB) on Sunday strongly opposed the government’s decision to extend LIOC’s petroleum license.
SJB Deputy General Secretary Mujibur Rahman questioned the basis on which the Government granted the license renewal.
He said the agreement with LIOC was originally established in 2001, granting the entity hefty tax concessions and a 20-year license to operate in Sri Lanka in exchange for a USD 70 million investment.
The agreement was struck without a competitive tender process and lacked transparency, Daily Financial Times newspaper quoted him as saying.
“Once again, there was no competitive tender process or transparency. Are we obligated to grant this deal to the IOC? Was this agreement secretly negotiated between President Ranil Wickremesinghe and Prime Minister Narendra Modi?” he asked.
Rahman claimed that IOC did not address the fuel shortages during Sri Lanka’s severe crisis or provide better prices to the public.
