Panel to recommend reforms in NOC

SANGAM PRASAIN

KATHMANDU, MAR 29 -

In yet another bid to bring reforms in the state-owned Nepal Oil Corporation (NOC), the government recently formed a committee under the coordination of lawmaker Bhim Acharya.

The committee has been asked to conduct studies on NOC’s losses, shrinkages, leakages and administrative costs and recommend necessary reforms to the government.

Although several committees were formed over the last decade, their reports were always dumped without implementation. However, unlike previous committees, this committee has been formed at the political level by the Cabinet.

What makes the new committee different from earlier ones is it has representation of all major parties at the Constituent Assembly. The idea behind this all-party mechanism is to let the parliament and parliamentarians know the issues plaguing NOC. Time and again, lawmakers have been criticising the government over the price hike of petroleum products.

Fearing public protest, the government always took populist move of giving subsidy to NOC every time when there was need for price hike. Initially, the Ministry of Finance provides NOC with loans which are later converted into grants. “First of all the country imports petroleum products using foreign currency. On top of that, we are giving grants to NOC,” said a senior MoF official. “The government cannot bailout NOC in this manner.” The first meeting of committee held on Saturday decided to collect suggestions from 28 political parties, 13 student unions, consumer rights activists and other stakeholders to formulate a concrete measure to address the problem.

Lawmaker Hari Roka, a member of the committee, said the panel will study the current distribution system, NOC’s administrative cost, price adjustment mechanism, its arrears and even political recruitments. “The committee will draft certain rules and regulations to make the corporation transparent,” he said. Roka added that they have asked NOC to provide all its documents.

In 1995, the government had formed NOC reform committee followed by another committee in 2002 under the coordination of Tapa Bahadur Singh. Another committee headed by Shankar Sharma was formed in 2004 and then next committee headed by Bhanu Prasad Acharya was formed in 2006.

All four previous committees had suggested an automatic fuel price adjustment system in line with the international price, but could not be implemented.

Reform measures recommended successive committees include automatic price rise as per the international trend, petroleum price be increased to the level that covers NOC’s costs and liberalisation be adopted in import and distribution.

However, successive governments have failed to implement these measures and there are doubts whether recommendations made by the new committee will be implemented. Roka himself is not sure over the implementation of recommendations of the new committee. “Reforms in NOC will depend on the next supply minister,” said Roka. The committee is scheduled to submit its report within next 10 days.

Trade expert Posh Raj Pandey said the key and longstanding problem of NOC is the pricing of fuel. “Market forces doesn’t fix the price here, but is done by the government,” he added.

Pandey stressed on the need for appointing multiple suppliers, ending NOC’s monopoly. This will create a competitive environment and people can get oil at competitive rates. “The government should encourage the private sector to step into oil business. It should even offer them incentives for the purpose,” he added. Petroleum dealers are also not confident regarding the implementation of the new report. “Reports are always prepared and dumped,” said Saroj Pandey, president of Petroleum Dealers’ Association, expressing dissatisfaction over the formation of the committee without the representation of the private sector.

However, Ministry of Commerce and Supplies Spokesperson Ganesh Dhakal seemed positive. “For the first time, a high level committee with the representation of several political parties has been formed,” said Dhakal.