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Lanka IOC, the Sri Lanka unit of Indian Oil Corporation, has announced that bunker sales increased to 15 percent of total revenues in the year to March 2010.

Total sales volumes of marine fuel during the 12-month period increased by 128 million litres from just 21 million litres a year earlier to 149 million litres.

Sales revenue also increased to 7.7 billion rupees (US$69.4 million), up from 977 million (US$8.8 million) the previous year.

The significant growth in bunker sales volumes and revenue was achieved during a period of aggressive pricing by Lanka IOC.

In September 2009, the company claimed to have already achieved a 35 percent market share since launching commercial bunker supply operations at the port of Colombo in November 2008.

According to recent estimates, total market volumes have increased to around 30,000 tonnes a month at Sri Lanka's leading port. Eighteen months ago, monthly sales at Colombo were said to be around 15,000 tonnes per month.

In July 2009, Lanka IOC announced that it had chartered an additional bunker barge to meet increasing bunker demand at Colombo. The company, which up until then had been using two locally-chartered barges for delivering marine fuel to customers, chartered its third vessel - a 1800 metric tonne tanker barge - to keep up with the rise in orders.

Licence holder Lanka IOC Plc. is understood to have the capacity to store around 8,000 tonnes of bunker fuel at the Bloemendhal Road oil storage complex in Colombo.

OPL plans

Last month Lanka IOC said that it was aiming to increase bunker sales further by targeting the OPL (off port limits) market.

The company said that it is aiming to raise volumes by supplying marine fuel to vessels passing Sri Lanka on the main East-West trade route that do not necessarily call at the the port of Colombo to load or discharge cargoes.

Company results

Despite the rise in bunker sales revenue, the annual financial results for Lanka IOC showed that the company recorded a loss of 422 million rupees (US$ 3.8 million), down from 1,237 million rupees (US$11.15 million) the previous year.

Lanka IOC pays high import duties and excise taxes on refined products imported to the country.

The company's audited accounts filed with the Colombo Stock Exchange showed that losses were reduced with the help of a 581 million rupee value added tax write back allowed by revenue authorities.