Even as the government is yet to release already committed loans of Rs 1.5 billion to Nepal Oil Corporation to finance imports, the state-owned petroleum monopolist has declared it will need another Rs 1.77 billion in loans to keep supply going in May.
The situation emerged mainly after fresh pricing issued by the Indian Oil Corporation on Friday further soared up the corporation´s loss, and officials doubt over government taking bold step to adjust prices.
“We will need another tranche of loans again soon if the government did not act immediately to plug the loss,” said an official at NOC.
Referring to the new import rates, NOC Spokesperson Mukunda Dhungel said the corporation´s loss for this is calculated to jump to Rs 1.77 billion. “Loss on petrol has narrowed down to Rs 3.75 per liter from Rs 4.30,” said Dhungel, adding, “However, loss on diesel has jumped to Rs 20.96 from over Rs 19 per liter.”
NOC´s loss on kerosene has increased to Rs 11.25 from Rs 4.50 per liter, while import-sales gap on liquefied petroleum gas (LPG) has widened to Rs 288.79 per cylinder (of 14.2 kg) from Rs 254.
Since diesel makes up more than two-thirds of the total fossil fuel that the country consumes, Dhungel said at the present rate, NOC is poised to suffer a loss of over Rs 1.42 billion on diesel trade alone. Loss from LPG, consumed by urban upper and middle class, hotels, restaurants and manufacturing industries, too is calculated to cross Rs 317.6 billion. Kerosene will generate additional loss of around Rs 50 million in April.
Aviation fuel is the only product in which NOC is making profit. However, even the profit in this product has shrunk to Rs 9.20 per liter from Rs 15.73 per liter under the new rates, according to Dhungel.
As crude continue to remain volatile to unrest in middle-east and growing demand in Japan and other countries, Nepal has been passed on the crude rate of around $102 per barrel. However, domestic fuel rates are equivalent to crude price of $77.
“This is a huge gap. Unless the government dares to plug it, we will have no other option but to continue seeking loans from the government,” said another NOC official.
NOC has already acquired Rs 2.44 billion in loans from the government over the first eight months of the current fiscal year. The government is in the process of releasing it another Rs 1.50 billion to finance import. Apart from that, NOC has also borrowed additional Rs 500 million from different financial institutions to maintain supplies.
“Our outstanding loans have now accumulated to about Rs 15 billion,” the official said, elaborating that the figure will continue to soar unless the government ends the faulty policy immediately.
Although high-level commission and experts have repeatedly pin pointed that Nepal cannot afford to provide subsidy on petroleum products, the government has continued to remain apathetic to automatic pricing mechanism under which prices are adjusted in line with the international trend.
“The faulty policy has already drained away huge state resources. Unfortunately, it will continue further because the government will simply not be able to raise prices to the extent it needs to plug the loss,” said the official.
Loss per liter
Petrol Rs 3.75
Diesel Rs 20.96
Kerosene Rs 11.25
LPG Rs 288.79
Aviation Fuel Profit Rs 9.20 per liter
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