The Managing Director of Lanka IOC PLC (LIOC) Subodh Dakwale says that the company plans to invest a further Rs.400 million on adding another 20 fuel stations to the current network within the next financial year, while also completing refurbishments of the existing fuel outlets.

Addressing stakeholders in the company’s recently released Annual Report the Chairman said that LIOC also planned to continue to expand its market share of the lubricants sector through promotional campaigns and by utilizing the growing fuel station network as retail points.

“We have already conducted extensive market surveys in this respect and revamped Lanka IOC lubricants will be launched in the new financial year. Meanwhile, plans for exporting lubricants will be unrolled during the year to test the markets of Indonesia and Malaysia,” Dakwale said.

He noted that during the current financial year LIOC concluded a study on entering export markets with its premium lubricants and they were currently in the process of testing the export markets with the appointment of a limited number of distributors for Lanka IOC lubricants.

During the year ended 31st March 2015, LIOC said it has established 12 new fuel stations at an investment of approximately Rs.240 million while the refurbishment drive overhauled 11 fuel stations at a cost of approximately Rs.440 million. The firm also claimed it had continued to retain 18% of the domestic fuel retail market through a network of 179 island-wide fuel retail outlets.

The LIOC MD meanwhile said that although he does not anticipate significant revenue contributions from market development initiatives over the short term, he believes that export markets will open up new revenue opportunities over the longer term.

“Our bunkering operations are currently facing severe price competition from Indian ports that are able to offer lower prices due to domestic production of fuels, while Lanka IOC has to accommodate the additional costs related to fuel imports,” Dakwale said.

Commenting on fuel, Dakwale reiterated his request to the authorities on the pressing need for a transparent fuel pricing mechanism. He said a fuel pricing mechanism is essential for the protection of long-term interest of the nation, by ensuring fair and flexible fuel prices to support sustainable economic development. Such a mechanism would minimize the scope for price manipulations that are contrary to the public interest.

“Between December and end-March 2015, the Company sustained a revenue loss of Rs.60 per every liter of petrol sold. Together with the lower incomes from diesel, overall earnings from the fuel portfolio, which accounts for approximately
75% of total revenues, contracted drastically. This sharp fall in revenues coupled with higher taxation, resulted in profits after tax falling to Rs.1.8 billion, which is a 61% erosion in net profits against the previous year,” the LIOC MD said.