NOC likely to get Rs 2.5 billion today

KATHMADU, April 17 :

The government has requested Citizens Investment Trust (CIT) and Employees´ Provident Fund (EPF) to lend Rs 2.5 billion to Nepal Oil Corporation (NOC) in order to ease supply of petroleum products.

The cash-strapped NOC had asked the government to arrange Rs 5 billion to clear its outstanding dues to its sole supplier Indian Oil Corporation (IOC).

According to government officials, NOC can use the amount to clear half of its dues and request IOC to resume normal supply of petroleum products.

IOC has cut off fuel supply by 40 percent since last week after NOC failed to clear its outstanding dues of February.

Officials at the Finance Ministry said NOC will sign loan agreement with CIT and EPF on Thursday.

“We´ve asked CIT and EPF to provide loan of Rs 2.5 billion assuring them that the government will stand as guarantor,” Ram Sharan Pudasaini, joint secretary at the Public Enterprise Coordination Division under the finance ministry, told Republica.

NOC already owes Rs 18.78 billion to the two the state-owned organizations. The state-owned petroleum monopolist owes a total of Rs 34.16 billion to different financial institutions and government, which is 25 times its net worth.

NOC is charging Rs 4 per liter of petroleum products -- petrol, diesel, kerosene and ATF -- and Rs 56.80 per LPG cylinder to pay interest to these organizations.

“The government has no fund under budgetary program to provide grant to NOC,” Pudasaini said, adding "The government can´t provide fund to subsidize petroleum products by reducing development budget."

The International Monetary Fund (IMF) has already recommended government to remove subsidy on petroleum products.

Consumption of petroleum products is increasing with each passing year. Country´s balance of payment (BOP) will be severely affected if the government continued to subsidize petroleum products.

Nepal imported petroleum products worth Rs 87.88 billion over the first eight month of the current fiscal year.

Statistics shows NOC is suffering loss of Rs 1.03 billion in LPG and Rs 320 million in diesel every month.

Meanwhile, the parliamentary committee, formed to recommend reform measures in NOC, held its meeting on Wednesday. The meeting, however, failed to take any important decision.

Source: Republica