Cash-strapped NOC struggles to ensure supplies

SANGAM PRASAIN

KATHMANDU, APR 14 -

State-owned oil monopoly Nepal Oil Corporation (NOC) is struggling to ensure smooth supplies of petroleum products as promised loans from the Ministry of Finance (MoF) have not materialised.

Long queues are back at gasoline stations across the country after cash-strapped NOC cut deliveries.

The MoF has provided Rs 500 million out of the Rs 1.5 billion pledged citing lack of resources. NOC has said that there would be an acute shortage of fuel if the government doesn’t provide the committed credit. The government has so far given Rs 2.44 billion to NOC to import oil this fiscal year.

MoF officials said the ministry had no money in its contingency budget. With two major P1 projects, Sikta Irrigation Project and Mid-Hills Highway, also seeking additional resources, officials said the ministry can’t provide the committed loans to the NOC.

“There is no money in the contingency budget,” said Bodh Raj Niraula, chief of the ministry’s budget department. “Even for Sikta and the Mid-Hills Highway, we’re struggling to provide additional resources.” Sikta has sought Rs 250 million more while the Mid-Hills Highway had asked for another Rs 1 billion two months ago. “If we had resources, we could have provided the money to these high-priority projects,” said Niraula.

Even after getting Rs 500 million, NOC is seeking another Rs 1 billion to pay its supplier Indian Oil Corporation (IOC). “The supply will return to normal only if NOC gets additional resources,” said Ganesh Dhakal, spokesman at the Ministry of Commerce and Supplies.

NOC’s monthly import bill comes to Rs 5 billion and it makes monthly payments to IOC in four installments. It had paid IOC Rs 2.2 billion till the second week of April. “NOC still owes Rs 1.07 billion,” said Bachhu Kumar Kafle, NOC deputy general manager.

NOC cannot adjust the price of petroleum products until the high-level committee on NOC submits its report. Company officials said the government should finance oil imports till then.

NOC’s loss for April is estimated to amount to Rs 1.76 billion at current prices. Its losses are expected to mount after IOC sends its revised petroleum prices on April 16.

As per the rates of April 1, NOC is incurring losses of Rs 3.75 per litre on petrol, Rs 21 on diesel, Rs 11 on kerosene and Rs 288 per cylinder on liquefied petroleum gas (LPG). Aviation fuel is the only product on which NOC is making a profit.

NOC officials said IOC’s new price would increase its losses, but the supply of LPG and aviation fuel would be normal. “The only problem is with diesel which accounts for more than two-thirds of the imports and losses of over Rs 1.42 billion,” an NOC official said. The loss on diesel has increased from Rs 19 to Rs 20.96 per litre, according to NOC.

NOC officials admitted that imports had been slashed but the supply hadn’t been cut. “The queues at the gasoline pumps in Kathmandu on Wednesday was due to the public holiday on Tuesday,” said Kafle. “We have directed the Thankot depot to supply adequate fuel on Wednesday.”

Thankot depot had supplied 300 kl of petrol and about 30 tankers of diesel on Wednesday which is the usual daily requirement of the Kathmandu Valley.