NOC’s monthly projected loss jumps to Rs 1.15 billion

DEBT-RIDDEN Nepal Oil Corporation’s (NOC) monthly projected loss has ballooned to Rs 1.15 billion, sparking fears of a possible petroleum shortage. NOC officials said there is “not much pressure” on supply, but if the situation is not addressed by the government, who regulates supplies, on time, “it could affect the market”. Sources said NOC is preparing to knock the government’s door, seeking Rs 4 billion to finance petroleum imports. As per the tariff sent by its sole supplier Indian Oil Corporation (IOC) on Thursday, the perennially broke corporation will incur a loss of Rs 1.15 billion, which NOC attributed to a fluctuation in crude oil prices in the international market. IOC reviews the export prices of petrol and diesel fortnightly and of other products such as kerosene, aviation fuel and LPG on a monthly basis. “Immediately, we don’t have supply pressure. However, with the festival season approaching, the government needs to pay attention on the supply situation,” said Shiva Prasad Pudasaini, spokesperson for NOC. The state-owned petroleum supplier, however, said it dœs not have outstanding dues to its supplier this time. “As a result, the burgeoning losses have not affected the supply situation much as in the past,” he said. Based on Thursday’s tariff, NOC will incur Rs 523 loss per liquefied petroleum gas (LPG) cylinder. Which means the loss on its LPG business alone will be Rs 733.2 million a month based on the estimation that 1.4 million LPG cylinders are sold every month. NOC said it will be losing Rs 9.31 on a litre of diesel, or Rs 633.4 million losses on the sale of estimated 68,000 kl diesel every month. On petrol, NOC faces a loss of Rs 0.90 per litre. The corporation, however, enjoys a profit of Rs 6.54 on a litre of kerosene, Rs 22.64 on a litre of aviation fuel sold to international carriers, and Rs 17.91 on a litre of aviation fuel sold to domestic airlines. According to Deepak Subedi, spokesperson for the Ministry of Commerce and Supplies, the ministry has been holding discussions on ensuring smooth fuel supply, reviewing the latest NOC’s loss. Subedi, however, did not disclose the exact amount that the ministry is seeking to bailout the NOC. NOC’s total outstanding debts to the government and financial institutions stand at around Rs 28.50 billion. It has borrowed Rs 12.64 billion from the government to finance petroleum imports. The government has been bailing out NOC frequently when the market suffers acute shortage of petroleum products. As the government controls petroleum prices, it has been hurting its revenue collection and has also strained foreign exchange reserve. Various agencies have recommended deregulation of oil prices and participation of the private sector in the petroleum business. With a number of private sector companies willing to invest on oil trade, the government on March 13 issued the Petroleum and Gas Transaction (regulatory) Orders 2013, allowing the private sector in the oil business. However, it was forced to roll back the orders after massive criticism from experts and entrepreneurs. Ministry officials said the government is preparing to reintroduce the orders and it has been reviewing it in coordination with various experts and stakeholders. Nepal imported petroleum worth Rs 100.57 billion in the first 11 months of 2012-13, up 16 percent, according to the official data.