Nepal Oil Corporation is bankrupt due to heavy loss in cooking gas.
The state oil monopoly is selling a cylinder of Liquified Petroleum Gas (LPG) at Rs 1,470 that is Rs 681.91 less than its purchase price.
It costs Rs 2,151.91 to bring a cylinder of cooking gas to Kathmandu. The NOC is making Rs 3.47 loss in a litre of diesel, apart from cooking gas, making it a total of Rs 727.80 million montly loss.
However, the experts asked the government to waive VAT on cooking gas to bring NOC out of red. “After removing the VAT from the cooking gas, the NOC will not make any loss as it make make up loss in diesel with profits from other products,” according to the NOC spokesperson Mukund Ghimire.
Meanwhile, former commerce and supplier secretary Purushottam Ojha suggested the government to separate petroleum products according to its financial viability. “The diesel is making a less loss, which could be made up from the profit from petrol and Air Turbine Fuel (ATF),” he said, adding that the loss of cooking gas should be shared by both government and consumer. “The government should waive VAT and raise a small sum if needed,” Ojha added.
However, the permanent solution is bringing Petroleum Act – that has been in talks since one decade – but gathering dust. “The proposed Act envisages a Petroleum Board that would regulate the petroleum business that is not regulated at present,” he said, adding that the NOC is making loss and the petroleum business people are having a good time.
The price adjustment according to the international market price is also a must to maintain the smooth supply of the fuel in the long run.
In absence of the price adjustment, the NOC is in loss and has not been able to pay its due to the supplier Indian Oil Corporation (IOC).
The loss-making state corporation is seeking loan from the government to pay its Rs 5 billion due to IOC.
NOC owns Rs 3.24 billion IC (some Rs 5.18 billion) dues to IOC.
Newly-appointed finance secretary Yuba Raj Bhusal – who joined the office today – formally asked Employees Provident Fund (EPF) and Citizen Investment Trust (CIT) today to jointly provide Rs 2.5 billion loan to debt-ridden NOC to pay part of its dues to IOC.
This is not the first time the government has asked the two state-owned institutions to extend credit lines to rescue debt-ridden NOC. Earlier, Employees’ Provident Fund lent Rs 10.85 billion to NOC, while Citizen Investment Trust has arranged credit of Rs 7.93 billion. NOC also owes Rs 12.64 billion to the government and another Rs 2.74 billion to commercial banks, making it a total of Rs 34.16 billion debt on the shoulder of NOC.
The ministry’s move came as the NOC failed to maintain smooth supply of petroleum products. The IOC slashed 30 per cent supplies of petroleum products to NOC after NOC failed to pay its outstanding dues to IOC.
NOC owes IOC a total of Rs 5 billion dues.
The drop in supply caused fuel shortage in the country since last one week.