NOC demands credit line of Rs 2bn

KATHMANDU:

Debt-ridden Nepal Oil Corporation has once again requested for a loan of Rs two billion from the government to pay the debt it owes to Indian Oil Corporation, which supplies all petroleum products to country.

A proposal in this regard was sent by the state-owned oil company to the Ministry of Commerce and Supplies, which was later forwarded to the Ministry of Finance.

The Finance Ministry has taken the request positively and written to the Employment Provident Fund and Citizen Investment Trust asking whether they can extend a loan of Rs one billion each to NOC.

“Since the provident fund and the investment trust will not say no to our request it is almost sure NOC will receive the loan amount it has asked for,” a high-ranking official of the finance ministry told The

Himalayan Times.

If the state-owned oil company is extended the credit line it will accumulate a total debt of over Rs 32 billion, of which Rs two billion was

extended only last month, jointly by the provident fund and the investment trust.

The oil corporation has continuously been demanding for loans as it is selling various petroleum products at a loss.

The oil supply monopolist is currently losing Rs 9.14 while selling every litre of diesel and Rs 740.12 on every cylinder of cooking gas.

Although the company is making a profit of Rs 7.50 while selling per litre of petrol, Rs 2.44 while selling every litre of kerosene, Rs 24.87 while selling per litre of aviation fuel to domestic airlines and Rs 28.02 while selling every litre of aviation fuel to international airlines, these gains are not enough to make up losses inflicted by sales of diesel and cooking gas.

As a result, the company is expected to post a loss of Rs 1.24 billion in the one-month period beginning October 16.

NOC has long been saying that the company will continue to suffer losses if the government does not take the initiative to adjust domestic prices with that of international rates. However, the government has not heeded the call as the subject

is a political hot potato and could trigger protests.

In September, when the government raised prices of petrol by Rs five per litre, and kerosene and diesel by Rs three per litre, students hit the streets for weeks. At that time, domestic airline operators had also threatened to halt all flights in retaliation to the government’s decision to raise the price of domestic aviation fuel by Rs seven per litre.

To minimise losses generated from sales of cooking gas, the government had earlier decided to remove subsidy extended on sales of gas used for commercial purposes that are currently being sold in blue-coloured cylinders. But that decision is yet to come into effect.

Source: THT