The loan is expected to cover NOC’s losses for two months
SANGAM PRASAIN
KATHMANDU, JAN 20 -
The Ministry of Finance (MoF) has agreed to provide Rs 1.30 billion loan to the Nepal Oil Corporation (NOC) to settle its increasing dues and avert another possible fuel price hike planned by the corporation. The next Cabinet meeting is expected to endorse this decision. After getting nod from the MoF, the Ministry of Commerce and Supplies (MoCS) has forwarded the loan proposal to the Cabinet. The government will provide Rs 800 million from Employees’ Provident Fund and Rs 500 million from Citizen Investment Trust to the corporation. The MoF has put the land of Birgunj Sugar Mill and Sanjha Yatayat up as government collateral for the loan.
Following rise in the international fuel prices, the NOC had asked the government either to provide fund for allow it to hike fuel prices. According to the NOC, it is incurring monthly losses of Rs 750 million due to increase in international price.
The MoF agreed to provide loan to the corporation after it agreed not to hike fuel prices for at least next two months. “We agreed to provide loan to the NOC to ensure smooth supply,” said Rameshwor Khanal, finance secretary, at Parliament’s Public Accounts Committee meeting on Wednesday.
“It has been agreed that international fuel prices will be monitored for the next two months. And, if international prices increase further, NOC will be allowed to hike fuel prices in the country.” The loan is expected to cover NOC’s losses for two months. The NOC had proposed fuel price revision citing that the crude oil price in the international market price climbed to over US$ 100 per barrel. The NOC says it has to settle outstanding dues of about Rs 450 million with Indian Oil Corporation (IOC) in order to ensure regular supply.
After the latest price hike on Dec. 6, 2010, the corporation faced criticism from all quarters. Parliament’s Finance and Labour Committee had asked it to review the price hike. However, the NOC said that it was not possible to rollback the price hike and instead asked the government for financial support.
At the PAC meeting, Khanal asked the NOC to explore possibilities of credit from the IOC.
Lawmakers and the government officials at PAC meeting on Wednesday underscored the immediate need for introducing scientific fuel pricing system. They also asked the NOC to expedite the Raxual-Amlekhgunj cross-border oil pipeline project and initiate the construction of large oil storage to ensure smooth supply.
