Nepal receives positive response to marketing margin

KATHMANDU, MAR 26: 

Indian Oil Corporation (IOC) has given a positive signal to limit the marketing margin to 2.5 per cent instead of five percent, according to officials.

“It is likely that Nepal will get the benefit of being a bulk consumer of Indian Oil Corporation and it will charge only 2.5 per cent marketing margin from IOC’s earlier proposal of five per cent,” said secretary at Ministry of Commerce and Supplies Lal Mani Joshi, adding representatives from Nepal Oil Corporation (NOC) and IOC are busy finalising the draft for the new pact.

IOC has been charging the costs associated to refineries and duties, which is known as the Price Adjustment Factor (PAF) under its current price formula under the 2007-agreement between both parties. But the withdrawal 

of PAF from the pricing structure did not satisfy the Nepali side because IOC had proposed to raise other component of the price formula — the marketing margin — to five per cent from existing 2.5 per cent levied on the outright prices of finished products.

The disagreement regarding the price formula is in the process of being solved, said Joshi. State-owned NOC and IOC are drafting the agreement paper to renew their five-year petro supply agreement for the import of petroleum products to Nepal from India, he said. The draft of the new agreement will be finalised by tomorrow, informed secretary Joshi. 

Nepal has agreed to continue with Indian Oil Corporation as its supplier of petroleum products for another five years. 

However, both parties can change the clause of the agreement by providing a notice six months in advance, according to an official at the ministry. However, the operating principles of the existing agreement will remain unchanged in the new agreement, according him.

The five-year contract agreement between NOC and IOC is a government-to-government supply arrangement under which India, through IOC, is meeting all of Nepal’s petroleum demand via NOC. A team from IOC is currently visiting Nepal to sort out all issues which have remained unsolved and to finalise the draft of the agreement.

19-kg cylinder nowhere near

The government’s plan to introduce 19-kg cylinders will not be implemented soon, according to Nepal Oil Corporation (NOC). “The recent board meeting of NOC has decided to change the colour of the existing 14.2-kg cylinders that are used for industrial purposes to blue instead of introducing the 19-kg cylinders,” said secretary at the Ministry of Commerce and Supplies Lal Mani Joshi.

Delay in pact

It is likely that the signing of the agreement between Nepal Oil Corporation and Indian Oil Corporation (IOC) will be delayed by a week. “Both the parties may sign the agreement by April 10 even though the outright agreement will expire on March 31,” said secretary at the Ministry of Commerce and Supplies Lal Mani Joshi. However, the delay in signing the agreement will not affect the supply of fuel from IOC. Nepal has asked IOC to continue with the supply of fuel, he said.

Source: THT