NOC warns of worsening fuel supply

NOC warns of worsening fuel supply
ekantipur, 7-Jul-08

The Nepal Oil Corporation (NOC) has warned that the long running fuel supply shortage can become worse as there is no concrete plan to address NOC's deepening financial crisis due to soaring global oil prices.
NOC officials told the Post that the supply situation has become more vulnerable as the corporation eyes losses of about Rs 1.30 billion for the month of July.

“The Indian supplier passed on the international crude prices of US$137 a barrel to Nepal in July 1. While this has further widened our financial gap, things could go really bad later this month,” a senior NOC official told the Post.

The state-owned petroleum import monopolist rang warning bells, as it has anticipated the Indian Oil Corporation (IOC) to pass on the international price of about US$ 145 per barrel to Nepal in mid-July.

Once that is incorporated into the domestic price structure, the retail prices of petrol and diesel would touch Rs 105 per liter each, kerosene will go up to Rs 95 a liter and liquefied petroleum gas (LPG) to Rs 1,600 a cylinder.

“That will widen NOC's losses to Rs 2 billion a month straight away,” said the source, elaborating that the corporation could fail to import even the existing volume of petroleum products from later this month.

The corporation is already importing less than half of the normal national requirement at present, which has left a majority of petrol pumps to be empty and made consumers queue for hours for a few liters.

Senior officials at the Supplies Ministry further said that the government was planning to release a fresh Rs 500 million to the ailing corporation within the next few days to step up its imports.

“However, we don't have a solid vision from the political leadership over how to balance the rising global oil prices with the increasing pressure to provide relief to the people,” said the official.

Meanwhile, NOC Monday instructed petroleum dealers to retail petroleum products at the government's fixed prices, which are slightly lower than that tabled by the Nepal Petroleum Dealers' Association (NPDA).

Issuing a letter to the dealers, the corporation even warned them of stringent actions if they failed to comply with its directives. “We will go to the extent of suspending operating licenses,” said the official.

If the dealers complied, the prices of petrol, diesel and kerosene would go down by about 75 paisa each from the existing retail prices. However, NPDA has so far refused to operate at the government's rates, saying that it would not generate enough returns to the dealers.