Govt gives NOC Rs 500m

Govt gives NOC Rs 500m
ArthaExpress, 25-Apr-08

The government Friday gave Rs 500 million to the cash-strapped Nepal Oil Corporation (NOC) to buy fuel.

“After the release of the money from the government, we are preparing to send it to the Indian Oil Corporation (IOC) Sunday to cut our debt,” said an official at NOC. The government, in the past, provided soft-loans of three billion rupees to NOC, which is currently incurring a monthly loss of Rs 1.35 billion, the largest amount ever.

The government´s financial support has come in the light of failure of NOC to supply petroleum products in sufficient quantities. Petrol scarcity has returned to the Kathmandu Valley. Many pumps are closed. Long queues are becoming normal in the front of the few operational petrol pumps.

Linenda Shreshta of Nepal Petroleum Dealers´ Association said the sole fuel distributor has cut distribution in the range of 50 percent. “Supply has shrunk, while demand has soared,” he said.

Presently, 150,000 liters of petrol, 1800,000 liters of diesel, and 180,000 liters of kerosene arrive in the Valley daily, a volume that falls far short of the demand. NOC has directed all its regional offices to distribute fuel as per the demand of the last year.

An NOC official said as the IOC has deducted supply by 30 to 35 percent, the distribution in the market has also gone down. “Today´s government financial support will be just a small help to pay back the loan to IOC,” said the official. “A sustainable solution should be explored.”

IOC has targeted bringing in 94,800 kiloliters of petroleum products, which cost Rs 5.71 billion. We will run cash short of Rs 2.37 billion, said the official. Global crude oil prices have rocketed to historic highs, reaching US$ 119.90 per barrel Wednesday.