‘Spiralling debt may see fuel cut’

NEPAL Oil Corporation (NOC) has warned that it could face cuts from its sole supplier Indian Oil Corporation (IOC) because of its ballooning debt. The state-owned oil monopoly said it owes Rs 1.60 billion to IOC due to the loss-making fuel subsidy policy. As per the new tariff sent by IOC on Sunday, NOC has projected its monthly loss at Rs 1.62 billion for September. The corporation is reportedly considering to reduce its imports in line with the losses it is currently incurring. 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. Sources at NOC said that the government, which controls fuel prices, has not shown any seriousness to the problem that could spark possible petroleum shortage if it was not addressed immediately. Based on Sunday’s tariff, NOC faces a loss of Rs 628 on a cylinder of liquefied petroleum gas (LPG), which would accumulate to Rs 880 million loss from LPG business alone. Its loss on a litre of diesel has jumped to Rs 13.90, or the corporation will incur an accumulated loss of Rs 945 million in the diesel business. “As losses have jumped beyond our capacity, we have asked the government to bailout the corporation to ensure smooth petroleum supply,” said Shiva Prasad Pudasaini, spokesperson for NOC. The government has committed Rs 4 billion bailout money for the NOC. Janmajay Regmi, chief of Public Enterprises Coordination Committee at the Finance Ministry, said that the ministry had held talks with the Employee Provident Fund and the Citizens Investment Trust to arrange loans for the NOC. “Due to the absence of finance secretary, we haven’t dispatched an official letter to both the government institutions,” Regmi said, adding that the government is aware of the situation. Finance Secretary Shanta Raj Subedi is currently attending the 6th SAARC Finance Ministers Meeting in Colombo, Sri Lanka. The NOC, which has total outstanding debts of Rs 28.50 billion to the government and financial institutions, has been caught in a pincer of a freefalling rupee and rising crude prices. Brent crude oil steadied around $114 on Monday after a week of gains, as a military strike against Syria looked less imminent and worries over possible Middle East supply disruptions receded, Reuters reported. It fell as low as $112.20 a barrel, down $1.81, but then rallied to around $114.45 on Monday.