Nepal Oil Corporation (NOC) has hinted that the market could face a short supply of petroleum products from October 1 if outstanding dues to its sole supplier Indian Oil Corporation (IOC) were not settled.
Although the Finance Ministry has decided to bail out the NOC with Rs 2 billion loan, NOC officials said they have not received the said amount yet.
The perennially broke NOC had sought Rs 4 billion in grant to ensure smooth fuel supply during Dashain and Tihar festivals and the Constituent Assembly elections slated for Nov 19, but the government decided to release half of the sought amount.
“As we have to settle Rs 3.20 billion in dues to IOC to get fresh consignment of gasoline from Oct 1, it will definitely put us in trouble,” said Suresh Kumar Agrawal, officiating managing director of NOC. “Although the government has committed to provide Rs 2 billion loans, the process has not been completed.”
The monthly projected loss of NOC soared to Rs 1.68 billion as per the tariff sent by IOC on September 15. NOC officials have estimated the monthly loss to balloon to Rs 2 billion when IOC releases new tariff on Oct 1. The monthly loss was estimated at Rs 1.33 billion on Sept 1.
NOC said rising crude oil prices in the international market and appreciation of the US dollar contributed to the massive rise in the projected loss.
IOC reviews export prices of petrol and diesel fortnightly, and other products such as kerosene, aviation fuel and LPG on a monthly basis. NOC’s loss on a litre of diesel stands at Rs 15.20, or Rs 1.03 billion a month as per the projected monthly sales of 68,000 kilolitres of diesel.
The state-owned oil monopoly has also been incurring a monthly loss of Rs 880 million in its liquefied petroleum gas (LPG) business due to subsidies. It has been providing a subsidy of Rs 628 on an LPG cylinder. The estimated losses are based on the projected consumption of 1.4 million LPG cylinders monthly.
To offset its losses, NOC had increased the price of petrol by Rs 5 per litre, kerosene and diesel by Rs 3 per litre, and aircraft fuel by Rs 7 per litre on September 10. However, 14 student unions have been pressuring the NOC to roll back the price hike.
NOC’s outstanding debts to the government and financial institutions stand at around Rs 28.50 billion.
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