Govt agrees on Rs 2.1b loan to NOC
KATHMANDU, MAY 14 -
The government has agreed to release a loan of Rs 2.10 billion to the Nepal Oil Corporation (NOC) to finance petroleum import.
As the NOC is struggling to make payments to Indian Oil Corporation (IOC) for importing adequate fuel, petroleum shortage has surfaced across the country since the last three weeks.
The Ministry of Commerce and Supplies (MoCS) spokesperson Deepak Subedi said the Finance Ministry has approved the loan, and that the proposal will be tabled at the Cabinet on Monday. Of the total proposed loan, Rs 1 billion has been arranged from the Citizens Investment Trust, Rs 600 million from the Employers Provident Fund (EPF) and the remaining from the Finance Ministry.
However, the NOC said that the pledged amount is not enough even to pay the outstanding dues to its supplier IOC.
“NOC’s outstanding dues to the IOC have exceeded Rs 3 billion,” said Suresh Kumar Agrawal, acting managing director of the NOC. The state-owned oil monopoly said it will be requesting the IOC to resume smooth fuel supply after the settlement of dues. With the NOC’s dues ballooning, the IOC had even hinted that it will not be able to provide petroleum products on credit, an NOC official said. The NOC had earlier written to its line ministry asking to release Rs 4 billion to ensure uninterrupted fuel supply till May 27. Subsequently, the Finance Ministry assured cash injection to the corporation.
The NOC currently owes Rs 23.17 billion to the government and various banks and financial institutions. Of the total loans, the NOC owes Rs 10.73 billion to the government, Rs 6.40 billion to the EPF, Rs 4.13 billion to the CIT and Rs 1.90 to banks and financial institutions.
Currently, the NOC has 12,000 kl fuel in its stock, barely enough to meet the country’s demand for three days. Fearing a possible political backlash against fuel price hike, the government has been repeatedly bailing out the NOC with loans and grants, instead of allowing it to adopt the automatic price adjustment as per international market prices.
The NOC is incurring a loss of Rs 598 in each LPG cylinder and Rs 10.60 in a litre of diesel. According to NOC, its monthly projected losses stand at Rs 1.14 billion.
Source: The Kathmandu Post
