Monday, July 10 2006 17:50 Hrs (IST) - World Time -

New Delhi: Indian Oil Corp (Indian Oil) hopes that pricing and subsidy issues relating to Lanka Indian Oil Corporation (LIOC) would be resolved soon enabling the subsidiary to resume normal operations, its chairman and managing director Sarthak Behuria said Monday.

Denying having received any notice from the Sri Lankan government of a possible takeover of its retail outlets on the island country, Behuria said the matter of subsidy was being sorted out.

"There is an issue of an outstanding amount of $70 million arising due to subsidies on petroleum products. The Sri Lankan government has given us revised pricing and subsidy proposals that are being legally examined. We hope the issue will be sorted out soon," Behuria told sources.

The official admitted that some of its 162 retail outlets have run out of petrol due to the financial crunch.

"The Sri Lankan company is facing severe crunch due to the lack of working capital. As and when funds are available, the LIOC is importing petrol and diesel for operation of the retail outlets," he said.

"Till the outstanding amount is cleared and the cash position improves, the company will continue to live in hand-to-mouth conditions," he said.

Behuria, however, denied that LIOC has suspended its operations because of differences with the Sri Lankan Government over the subsidy issue which has been pending since July 2004.

Listed on the Colombo Stock Exchange, LIOC is operating 162 out of the 1,000-odd retail outlets in the island nation and has a 32 percent market share in retail fuels and 16 percent share in the lubricant business.

Declining to comment on Sri Lankan Oil Minister A.H.M. Fowzie's reported threat to take over the retail outlets of LIOC if it does not resume the sale of petrol in 30 days, Behuria said while some outlets had gone dry due to the lack of funds to source supplies, the company was continuing to operate despite the financial crunch.