Managing director Subodh Dakwale said the firm planned to enter the sector as soon as the government nod was given.
LankaIOC retails petrol, diesel, lubricant, bunkers for ships and bitumen. Sri Lanka's retail prices set by state-run Ceylon Petroleum Corporation, which is followed by LankaIOC.
Petrol is heavily taxed and diesel lightly taxed. Lanka IOC officials have said that diesel was making a loss, though sold at price higher than CPC.
Dakwale told reporters earlier this month that the firm was planning to retail Euro III grade diesel following a request from Sri Lanka's motor sector.
It already sells Euro III petrol.