Finance Ministry has agreed in principal to arrange loan of some Rs 2 billion for state oil monopoly.
The technically bankrupt Nepal Oil Corporation has been fighting to supply the fuel smoothly after the sole supplier Indian Oil Corporation (IOC) reduced the supply as NOC failed to pay outstanding dues.
The Finance Minister and Ministry of Commerce and Supplies agreed to arrange Rs 2.5 billion for the debt-ridden NOC that can pay its partial dues.
The Finance Ministry has been denying the NOC the loan from the budget as it could solve only the problem in short term and not in the long run.
The Finance Ministry is going to request Employment Provident Fund and Citizen Investment Trust to extend loans of Rs 1 billion each to the state oil monopoly.
The ministry – in the past also – has asked these two state-owned institutions to arrange credit for NOC that has been desperately looking for IRs 3.24 billion – around Rs 5.18 billion – to the supplier IOC.
The NOC had promised IOC that it would clear the due within the end of February but it failed. The failure made IOC slash fuel supply.
According to government, NOC can use the amount to clear half of its dues and request IOC to resume normal supply of petroleum products.
NOC already owes Rs 18.78 billion to the two the state-owned organisations. The state-owned petroleum monopolist owes a total of Rs 34.16 billion to different financial institutions and government, which is 25 times its net worth.