NOC’s Rs 2b bailout request begins bureaucratic journey
KATHMANDU, JAN 09 -
The Ministry of Commerce and Supplies has said that it would pass on Nepal Oil Corporation’s ( NOC ) request for Rs 2 billion in bailout funds to the Finance Ministry on Thursday.
The state-owned oil monopoly had recently asked for the sum to finance petroleum imports as it was low on money due to mounting losses. It said that if the government did not provide financial aid, there could be fuel shortages from mid-January.
“We received NOC ’s ‘grant’ request letter on Wednesday and we will be sending it to the Finance Ministry,” said Deepak Subedi, spokesperson of the Commerce and Supplies Ministry. NOC has demanded money as the government had turned down its request to jack up gasoline prices to cover its ballooning losses. The latest tariff sent by Indian Oil Corporation (IOC) on Jan 1 has pushed up NOC ’s monthly projected loss to Rs 1.85 billion.
NOC has said that extended load-shedding hours during the winter season had swelled demand for diesel and LPG (liquefied petroleum gas) forcing NOC to ask the government for a handout to maintain smooth fuel supplies.
The debt-ridden NOC has taken loans from the government and financial institutions amounting to Rs 33.66 billion, including Rs 5.16 billion provided this fiscal year only to prevent NOC from biting the dust and ensure smooth supply of gasoline during the Dashain and Tihar festivals and the Constituent Assembly election on Nov 19.
As per the latest import tariff, NOC incurs a monthly loss of Rs 1.60 billion by selling 1.4 million tonnes of LPG. It subsidizes LPG to the tune of Rs 1,143 per cylinder.
Likewise, its monthly losses on diesel amount to Rs 641.3 million. It subsidizes diesel to the tune of Rs 9.87 per litre. However, NOC makes a profit on petrol, kerosene and aviation fuel.
IOC reviews its export prices of petrol and diesel fortnightly and of other products such as kerosene, aviation fuel and LPG on a monthly basis. Petroleum is the largest import commodity of Nepal. In 2012-13, the country imported petroleum products worth Rs 107 billion, up from Rs 92.25 billion in 2011-12.
Meanwhile, Gas Dealers Federation Nepal (GDFN) said that extreme cold in India and Nepal had delayed LPG shipments leading to a slight shortage of the cooking gas.
“Transporting LPG from Barauni to Raxaul in India used to take 15 hours, but now it takes at least 72 hours due to the extreme cold and fog in the Tarai,” said Maheshore Shrestha, general secretary of GDFN. “With cold gripping the country, tanker drivers do not want to take the risk of driving during the night.”
Shrestha said that reduced shipments could result in a partial shortage of LPG during January.
Source: The Kathmandu Post
