Indian Oil Corporation (IOC) has extracted several sops and concessions from the Sri Lankan government even as it readies to get into the petroleum retail market in that country.
Lanka-IOC, the wholly owned subsidiary that will undertake the marketing of petroleum products there, has been granted income tax exemption for 10 years from the date of operation.
After 10 years, tax will be levied at a concessional rate of 15 per cent as against the prevailing rate of 35 per cent.
The Sri Lankan government has also exempted the company from customs duties on plant and machinery during the implementation of the project for five years.
Lanka-IOC has also been allowed free transfer of dividend and income to India without foreign-exchange restrictions.
An agreement has been signed between Ceylon Petroleum Corporation, the government of Sri Lanka and Lanka-IOC, under which the government has agreed to freeze the number of outlets in Sri Lanka for the next three years.
Also, the government has agreed that there would be only three players in the retail market, including Ceylon Petroleum and Lanka-IOC.
As per the agreement, any new outlet that would be sanctioned in the country would require the prior consent of the government of Sri Lanka, Ceylon Petroleum and Lanka-IOC.
IOC is targetting an investment of Rs 200 crore in Sri Lanka, which it plans to step up later.
The oil major is all set to mark its entry into the Sri Lankan petroleum retail market this month when it takes over the possession of 100 petrol stations from the Ceylon Petroleum by the month-end.
IOC had signed a memorandum of understanding with Ceylon Petroleum last year whereby the latter will divest 100 retail outlets in favour of IOC and also assist the oil major to re-assign the franchise outlets.
These would be then upgraded and refurbished to meet IOC standards.
