Srilankan government follows Indias footsteps to deal with high oil prices. In srilanks, retail prices hike have been few and far between for the comfort of the oil companies. IOCs subsidiary called Lanka IOC has is facing problem of losses in petrol and diesel . As a result of underrecoveries on fuel sales, Lanka IOCs net profit fell to Rs 33.7crore for the quarter end June 05 compared to SLR 78.6 crore in Q1 of the previous year. IOC had acquired 100 retail outlets from the Srilankan-Ceylon Petroleum , with the intention of finding a market for its surplus fuel in the Emerald Isle. IOC sources have revealed that Lanka IOC had an agreement with with the Srilanka Government whereby it would be compensated for any price price freeze. Using the formula based on import parity the payout to Lanka IOC was to be calculated. Dues for the past year-and -half have not been paid. The company has signed a 35-year lease with the Srilankan government in03 to develop and operate a fuel storage-tank facility in Trincomalee.