NOC is Back in the Red

10-month profit cycle ends; Rs 3.60 loss on per litre diesel

Nepal Oil Corporation (NOC) is bearing Rs 3.60 loss on per litre of diesel.

According to the new rate list that NOC received yesterday from its sole petroleum products supplier Indian Oil Corporation (IOC), its per litre loss in diesel has come down to Rs 3.60 from the rate it received on September 1.

"The loss on per litre of diesel then was Rs 4.91 and Rs 87.88 on a cylinder of cooking gas," said NOC managing director Digambar Jha.

On every 1st and 15th of the English calender month, NOC receives the new rate of diesel, kerosene and petrol from its supplier IOC. However, the rate of cooking gas is revised -- according to the international market price -- on the first of every English month. NOC, however, is in profit in petrol and kerosene.

The sole distributor of petroleum products in Nepal started downward adjustment of the price of petroleum products since last October when international prices plunged.

"NOC was in loss in the first three months of the last fiscal year 2008-09 -Shrawan, Bhadra and Ashwin -- but it started going into profit from the fourth month of fiscal 2008-09,"

Jha said adding that it seems that the last 10month profit cycle has come to an end as the price of petroleum products have started going up in the international market.

"NOC has posted a Rs 40 million loss and it might increase according to the new rate," Jha added. However, the 10-month profit cycle helped NOC pay Rs 1.40 billion and Rs 1.80 billion dues of IOC and domestic commercial banks, respectively. "Currently, Rs 2.10 billion of the Employees Provident Fund (EPF) and Rs 830 million of Citizens' Investment Trust (CIT) are yet to be paid," he said. NOC's cumulative dues come to Rs 10.84 billion including the government, EPF and CIT by August 31.

"Of the total dues, Rs 1.78 billion is an urgent need," said Jha. NOC has a transaction of Rs 60 billion worth of petroleum products. NOC contributes around Rs 10 billion to the national coffers as customs, VAT and other taxes.

Due to the growing demand for petroleum products, NOC has not been able to invest in infrastructure development. "Apart from planning for wellequipped lab to test the quality of petroleum products, NOC has recently started estimation and designing of new depos in Charali of Jhapa and Mahendranagar of Dhanusha," he added.