Financial Times

IOC, CPC reach deal on valuation of sheds
Lanka Indian Oil Corp (LIOC) and the Ceylon Petroleum Corporation (CPC) have reached agreement on the valuation for the 100 former CPC retail outlets acquired by the former, LIOC managing director M. Nageswaran said.

"Our own valuation is very close to that of PERC (Public Enterprise Reforms Commission). We have arrived at a settlement satisfying all parties and the valuation will be announced in a week or so," he said, speaking by telephone from Chennai.
"The Sri Lankan consumer will be able to decide for themselves soon when we offer a better product, at a better price with better service."

There had been no delay in arriving at a settlement, he said, adding that time was required for multi-million dollar agreements. The valuation report was tabled on July 1 and talks were finalised on September 19. LIOC's proposals for expanding its dealer network had been outlined in its business plan given to the government, Nageswaran said.

"We're adhering to the letter and spirit of the agreement," he said. "Our offers to dealers were done through public road shows in Colombo, Anuradhapura, Kandy, Galle and Puttalam. We're a transparent public sector company - we never give unethical offers.

"The Sri Lankan government asked us to approach 150 dealers - we're well within that limit - we have approached not even 30 dealers." Nageswaran also denied allegations of import duty evasion on recent imports of petroleum products.
"We explained our position to Sri Lanka Customs and they have accepted it. We paid the duty. The product was Jet A1 fuel, it was shipped as JetA1 for the CPC and sold as such by the CPC."

Nageswaran accused "vested interests" of spreading disinformation and trying to create a rift between LIOC and the CPC which he said enjoy a very warm relationship. He was referring to criticism that LIOC was resorting to unethical business practices in its efforts to expand its dealer network ahead of the entry of the third player into the island's retail petroleum market.

Reliance Industries, India's largest private sector oil firm, along with, state-run Bharat Petroleum Corp Ltd, Hindustan Petroleum Corp Ltd and IOC subsidiary IBP Co Ltd, have bid to acquire 100 petrol outlets here. Sri Lanka last month invited expression of interest from oil companies to buy 100 CPC petrol stations. Bids close by October 21.

Exxon Mobil Corp, the world's biggest publicly traded oil company, bid through local agent, McLarence Lubricants Ltd. France's Total SA and state-controlled oil companies in China, Malaysia and Thailand are among the 22 bidders in the race.

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