NOC to raise authorised, issued capital to Rs 30b

KATHMANDU, JAN 12 -
 
Nepal Oil Corporation ( NOC ) is all set to increase its authorised and issued capital to Rs 30 billion each. The oil monopoly has applied to the Office of Company Registrar (OCR) for the purpose. Currently, NOC ’s authorised and issued capital stands at Rs 9 billion each.

The NOC has also planned to increase its paid-up capital to Rs 20 billion from the current Rs 500 million, but it said the process will be initiated in the second phase. “We hope the OCR will approve our plan within a week,” said NOC Spokesperson Mukunda Ghimire.

Ghimire said the NOC decided to increase its capital after its balance sheet showed negative net worth continuously due to small size of capital against its annual transaction of Rs 130 billion.

As far as the paid-up capital is concerned, NOC first wants to convert the

government’s loan worth Rs 12.64 billion into share.

Then, it will make a pubic call to other shareholders to make further investment.

Presently, the government’s stake in NOC stands 98.38 percent, while the rest is held by four public enterprises—Rastriya Beema Sansthan, Rastriya Banijya Bank, Nepal Bank and National Trading Corporation.

“We also intend to add two other shareholders, including Employees Provident Fund (EPF) and Citizens Investment Trust (CIT), by converting their loans into shares,” he said. NOC has taken Rs 10 billion from EPF and Rs 8 billion from CIT in loans. Meanwhile, Finance Minister Shankar Prasad Koirala said efforts to implement auto price mechanism in petroleum products have not materialised.

“The oil import bill currently stands to one-fourth of the country’s budget, and given the scenario, sooner or later, the government has to implement the auto pricing mechanism,” Koirala said, addressing the 44th anniversary of NOC here on Friday.

Saying the government’s effort to implement dual pricing of liquefied petroleum gas (LPG), the largest contributor to NOC ’s losses, has failed, the minister urged the corporation to give momentum to the plan after the formation of a new government. He also urged the agitating Federation of Petroleum Transport Entrepreneurs to withdraw its protest, saying the government is committed to addressing its demands.   

NOC Managing Director Jay Raj Acharya said the inability to adjust fuel price in line with the international trend has put NOC under a heavy loan burden.

“As NOC is struggling to manage funds to finance petroleum import, time and again the market is forced to see fuel shortage,” he said.

NOC ’s loans taken from the government and different financial institutions stand at Rs 33.66 billion, and it has sought a fresh Rs 2 billion loan from the government to finance petroleum import. The cash-strapped corporation’s monthly projected loss stands at Rs 1.85 billion.

Shiva Prasad Ghimire, president of Nepal LPG Industry Association said the market is in short supply of LPG and urged the NOC to response to the issue immediately. “If the supply is not boosted, the country could face acute LPG shortage soon.”

Although, NOC has ordered 20,000 tonnes of LPG for January, it does not look like fulfilling the market demand due to extended load-shedding hours and winter. “Demand during the winter surges almost 20 percent due to increased use of LPG for heating and other purposes.”

Source: The Kathmandu Post