A fiasco named NOC
eKantipur, 15-Aug-08
BY SANJAY SHRESTHA
The state-run Nepal Oil Corporation has been in operation since January 10, 1970. We can say that the NOC has been able to maintain its vision and mission as mentioned in its profile by providing some degree of satisfaction to its unsatisfied customers with its services.
The facts show that there has been a dramatic change in the prices of gasoline in the last couple of years. It is not necessary to go back and compare the rates since its establishment. The data of the past 18 and a half years should suffice. Between 1990 and 2008, the prices of petrol, diesel and kerosene have swelled from Rs 19, Rs 7.50 and Rs 6 respectively to Rs 80, Rs 56.25 and Rs 51.20.
The NOC has always explained periodic price hikes by saying that they were unavoidable to save the corporation from the continuous losses it was suffering. Everybody knows the current price of gasoline. Even after the massive increase in the price, why has the NOC not been able to supply fuel in adequate quantities? Has it failed in its logistics that it cannot fulfill its responsibilities? The question remains unanswered. It would not be wrong now to say that the NOC has failed to carry out the vision and mission stated in its profile.
Although the NOC is said to be a semi-government enterprise, the government holds an enviable 98.36 percent of the shares with the rest owned by Rastriya Beema Sansthan (0.47 percent), National Trading Limited (0.78 percent), Nepal Bank Ltd (0.23 percent) and Rastriya Banijya Bank (0.16 percent). The NOC, therefore, can be said to be a fully government-owned company, and experiences unwanted and unhealthy intervention in its management. The government has direct control over its activities. The role of other shareholders is almost negligible.
Recently, the NOC stated publicly that it owes Rs 750 million to the Indian Oil Corporation. If that's true, we need to see evidence. The NOC has published no data about its financial activities as other companies do regularly. The secrecy has heightened public suspicion about the activities of its top management. The NOC is a monopoly. Why can't it bring out quarterly, half-yearly or yearly balance sheets if it has nothing to hide? Obviously, the government prevents it from publishing its financial statements. Why does the government keep such a strong grip on the NOC? Is it because some politicians pocket the profits?
There are many semi-government companies which the government has run into the ground by interfering with the management. Examples like Bansbari Shoe Factory, Nepal Airlines Corporation, Salt Trading Corporation, Nepal Food Corporation and Agriculture Corporation come to the fore. Among them, some have been dissolved and others pretend to be alive.
It has been a couple of days since the NOC introduced dual pricing for diesel. The corporation claims that it can cut its losses from Rs 750 million to Rs 650 million with this move. How feasible is the policy? And how effective will it be?
The NOC's storage policy provides another example of its lack of vision. Its present storage capacity is enough to fulfill the country's fuel requirement for only one and a half months. The NOC depot in Kathmandu has a capacity of 22,590 kiloliters, whereas the Amlekhgunj facility can store 23,640 kiloliters.
The NOC has been increasing the price of oil twice or thrice each fiscal year. For how much longer does it want to make the people suffer for fuel? Something is rotten in the NOC. It has racked up massive debts. Does it have any plans to make itself a debt-free company and start making money for a change? In plain language, the corporation is in need of a complete overhaul.
The Indian Oil Corporation, which is only six years older than the NOC, announced its quarterly unaudited profit of Rs 415 crore (Indian currency) in July 2008. Poor NOC announces losses every year.
The NOC should know that increasing the prices will not solve its problem. It should find long-term solutions to at least maintain a steady monetary policy without incurring losses. If the NOC is to become an efficient organization, it has to first come out from under government control. It could also issue shares to raise capital. If the NOC cannot break free of government interference, an alternative should be established.
Showing posts with label NOC. Show all posts
Showing posts with label NOC. Show all posts
Saturday, August 16, 2008
NOC chief goes ‘underground’
NOC chief goes ‘underground’
eKantipur, 16-Aug-08
Kantipur Report
In an ironic twist, which comes as a mockery of the country's governance, the managing director of Nepal Oil Corporation (NOC) has gone 'underground' after the Supplies Minister, his own patron minister, threatened to kidnap him.
"Digambar Jha is presently out of contact and has hidden himself at a place unknown to us after Minister Shyam Sundar Gupta bursting into his office Wednesday threatened to kidnap him if he did not give new licenses to operate to dealers and gas companies," said an official requesting anonymity.
Interestingly, Jha has gone into hiding at the suggestion of Home Ministry officials, whose doors he had knocked for security. "With the wrongdoer being the Minister himself, Home minister officials say they are helpless," said the official.
The 'shameful' episode unfolded after the corporation management turned down the minister's order to grant five petroleum retailing dealership licenses to four applicants.
They were Modern Crystal Hardware (Chabahil), East-West Hardware Enterprise (in Thimi and Shaktikhor, Chitwan), Mandevi Petrol Center (in Thapathali) and Shiva Pujan Oil Store (in Rupandehi).
Likewise, the minister through personal order had directed the corporation chief to issue import licenses to two liquefied petroleum gas companies based in Sunsari and Dhading.
"The orders were issued two months ago. However, given the fuel crisis and financial problems, Jha held the view that the decision should come after normalcy was restored at the corporation," said the source.
However, as the minister continued the pressure, Jha called a Board meeting to deal with the case. The board headed by the Supplies Secretary himself supported Jha's stand though. It agreed in principle to the proposal to open new petrol pumps and gas companies, but allowed the corporation management to decide on issuing licenses after fulfilling all required procedures.
None of the names the Minister gave had prepared infrastructure or shown expression of interest at NOC. "The whole process was just opposite of what the corporation follows for issuing licenses," said the source.
eKantipur, 16-Aug-08
Kantipur Report
In an ironic twist, which comes as a mockery of the country's governance, the managing director of Nepal Oil Corporation (NOC) has gone 'underground' after the Supplies Minister, his own patron minister, threatened to kidnap him.
"Digambar Jha is presently out of contact and has hidden himself at a place unknown to us after Minister Shyam Sundar Gupta bursting into his office Wednesday threatened to kidnap him if he did not give new licenses to operate to dealers and gas companies," said an official requesting anonymity.
Interestingly, Jha has gone into hiding at the suggestion of Home Ministry officials, whose doors he had knocked for security. "With the wrongdoer being the Minister himself, Home minister officials say they are helpless," said the official.
The 'shameful' episode unfolded after the corporation management turned down the minister's order to grant five petroleum retailing dealership licenses to four applicants.
They were Modern Crystal Hardware (Chabahil), East-West Hardware Enterprise (in Thimi and Shaktikhor, Chitwan), Mandevi Petrol Center (in Thapathali) and Shiva Pujan Oil Store (in Rupandehi).
Likewise, the minister through personal order had directed the corporation chief to issue import licenses to two liquefied petroleum gas companies based in Sunsari and Dhading.
"The orders were issued two months ago. However, given the fuel crisis and financial problems, Jha held the view that the decision should come after normalcy was restored at the corporation," said the source.
However, as the minister continued the pressure, Jha called a Board meeting to deal with the case. The board headed by the Supplies Secretary himself supported Jha's stand though. It agreed in principle to the proposal to open new petrol pumps and gas companies, but allowed the corporation management to decide on issuing licenses after fulfilling all required procedures.
None of the names the Minister gave had prepared infrastructure or shown expression of interest at NOC. "The whole process was just opposite of what the corporation follows for issuing licenses," said the source.
Thursday, July 17, 2008
Public enterprises make faltering picture
Public enterprises make faltering picture
ekantipur, 16-Jul-08
The performance of public enterprises weakened over the 2007/08 fiscal year, as 15 companies suffered losses leading to a decline in the volume of combined profits.
The Ministry of Finance (MoF), releasing a Yellow Book, projected that the enterprises earned a profit of three billion rupees during the fiscal year, as compared to eight billion rupees in the 2006/07 fiscal year.
It said mounting losses made by NOC was the prime cause to bring down the combined profits of the corporations. In the 2007/08 fiscal year, the oil supplier was projected to have suffered losses amounting to Rs 7.18 billion.
The eight billion rupees combined profits that the public enterprises managed to make in the 2006/07 fiscal year was a two-fold improvement on the profits made in the year before that.
In 2006/07, seven companied together paid combined dividends of nearly one billion rupees to the government. During the year, Nepal Telecom (NT) and the Agricultural Development Bank, Nepal (ADB/N) earned profits of six billion rupees and a billion rupees respectively.
Over the 2007/08 fiscal year, the public service providing enterprises like NT and Nepal Electricity Authority (NEA) did not do any better. MoF said NT's profit is expected to be more or less same, while NEA is expected to suffer a loss of a billion rupees.
ekantipur, 16-Jul-08
The performance of public enterprises weakened over the 2007/08 fiscal year, as 15 companies suffered losses leading to a decline in the volume of combined profits.
The Ministry of Finance (MoF), releasing a Yellow Book, projected that the enterprises earned a profit of three billion rupees during the fiscal year, as compared to eight billion rupees in the 2006/07 fiscal year.
It said mounting losses made by NOC was the prime cause to bring down the combined profits of the corporations. In the 2007/08 fiscal year, the oil supplier was projected to have suffered losses amounting to Rs 7.18 billion.
The eight billion rupees combined profits that the public enterprises managed to make in the 2006/07 fiscal year was a two-fold improvement on the profits made in the year before that.
In 2006/07, seven companied together paid combined dividends of nearly one billion rupees to the government. During the year, Nepal Telecom (NT) and the Agricultural Development Bank, Nepal (ADB/N) earned profits of six billion rupees and a billion rupees respectively.
Over the 2007/08 fiscal year, the public service providing enterprises like NT and Nepal Electricity Authority (NEA) did not do any better. MoF said NT's profit is expected to be more or less same, while NEA is expected to suffer a loss of a billion rupees.
Fuel supply worsens, over 50pc vehicles remain off road
Fuel supply worsens, over 50pc vehicles remain off road
ekantipur, 16-Jul-08
The number of four-wheelers plying the capital's roads was reduced to less than half Wednesday as the Nepal Oil Corporation (NOC) sharply cut supplies amid a three-quarter drop in imports due to the lack of funds.
The cutback left commuters stranded at different corners of the Kathmandu Valley while many packed into the few operating buses and three-wheelers (tempos).
The NOC said it distributed 72,000 liters of petrol dividing the stock equally between private and institutional retailers. The quantity is a mere 40 percent of the normal daily requirement.
Likewise, the cash-strapped state-owned petroleum importer distributed 84,000 liters of diesel, which is less than one-third of the valley's daily requirement.
“The situation is very bad. We cannot distribute even half of the required amount of fuel,” said a senior NOC official, preferring not to be named. “Imports from India have gone down to a quarter of what we consume in a day, and we neither have the funds nor anyone to turn to for money to increase imports,” he told the Post.
Sharad Bhandary, general secretary of the Nepal Petroleum Dealers Association, said that only nine private dealers received petrol on the day. “Each received a maximum of 4,000 liters, and that's only enough to create anger and quarrels among consumers rather than satisfying the need,” he said.
Bhandary added that the corporation had not distributed even a drop of fuel to private dealers from Friday to Monday. On Tuesday, it had delivered 1,800 liters to the retailers.
“With that amount of fuel, we became confused over how to distribute it and manage the crowd,” he stated.
NOC officials, moreover, added that the situation could remain bad through this week as it would need a few more days to arrange loans from domestic financial institutions. “A couple of banks have agreed to provide fresh loans. But it will take about a week before we actually get the cash, as they are just closed of their books of accounts on Tuesday,” he said.
He informed the Post that the corporation has sought additional financial support of Rs 1.5 billion from the government. A request in this connection was forwarded to the Supplies Ministry earlier this week.
But officials said they did not expect any immediate decision on the matter as the current government was preparing to hand over charge to the incoming administration and might not take financial decisions at this late hour.
ekantipur, 16-Jul-08
The number of four-wheelers plying the capital's roads was reduced to less than half Wednesday as the Nepal Oil Corporation (NOC) sharply cut supplies amid a three-quarter drop in imports due to the lack of funds.
The cutback left commuters stranded at different corners of the Kathmandu Valley while many packed into the few operating buses and three-wheelers (tempos).
The NOC said it distributed 72,000 liters of petrol dividing the stock equally between private and institutional retailers. The quantity is a mere 40 percent of the normal daily requirement.
Likewise, the cash-strapped state-owned petroleum importer distributed 84,000 liters of diesel, which is less than one-third of the valley's daily requirement.
“The situation is very bad. We cannot distribute even half of the required amount of fuel,” said a senior NOC official, preferring not to be named. “Imports from India have gone down to a quarter of what we consume in a day, and we neither have the funds nor anyone to turn to for money to increase imports,” he told the Post.
Sharad Bhandary, general secretary of the Nepal Petroleum Dealers Association, said that only nine private dealers received petrol on the day. “Each received a maximum of 4,000 liters, and that's only enough to create anger and quarrels among consumers rather than satisfying the need,” he said.
Bhandary added that the corporation had not distributed even a drop of fuel to private dealers from Friday to Monday. On Tuesday, it had delivered 1,800 liters to the retailers.
“With that amount of fuel, we became confused over how to distribute it and manage the crowd,” he stated.
NOC officials, moreover, added that the situation could remain bad through this week as it would need a few more days to arrange loans from domestic financial institutions. “A couple of banks have agreed to provide fresh loans. But it will take about a week before we actually get the cash, as they are just closed of their books of accounts on Tuesday,” he said.
He informed the Post that the corporation has sought additional financial support of Rs 1.5 billion from the government. A request in this connection was forwarded to the Supplies Ministry earlier this week.
But officials said they did not expect any immediate decision on the matter as the current government was preparing to hand over charge to the incoming administration and might not take financial decisions at this late hour.
Fuel supply worsens, over 50pc vehicles remain off road
Fuel supply worsens, over 50pc vehicles remain off road
ekantipur, 16-Jul-08
The number of four-wheelers plying the capital's roads was reduced to less than half Wednesday as the Nepal Oil Corporation (NOC) sharply cut supplies amid a three-quarter drop in imports due to the lack of funds.
The cutback left commuters stranded at different corners of the Kathmandu Valley while many packed into the few operating buses and three-wheelers (tempos).
The NOC said it distributed 72,000 liters of petrol dividing the stock equally between private and institutional retailers. The quantity is a mere 40 percent of the normal daily requirement.
Likewise, the cash-strapped state-owned petroleum importer distributed 84,000 liters of diesel, which is less than one-third of the valley's daily requirement.
“The situation is very bad. We cannot distribute even half of the required amount of fuel,” said a senior NOC official, preferring not to be named. “Imports from India have gone down to a quarter of what we consume in a day, and we neither have the funds nor anyone to turn to for money to increase imports,” he told the Post.
Sharad Bhandary, general secretary of the Nepal Petroleum Dealers Association, said that only nine private dealers received petrol on the day. “Each received a maximum of 4,000 liters, and that's only enough to create anger and quarrels among consumers rather than satisfying the need,” he said.
Bhandary added that the corporation had not distributed even a drop of fuel to private dealers from Friday to Monday. On Tuesday, it had delivered 1,800 liters to the retailers.
“With that amount of fuel, we became confused over how to distribute it and manage the crowd,” he stated.
NOC officials, moreover, added that the situation could remain bad through this week as it would need a few more days to arrange loans from domestic financial institutions. “A couple of banks have agreed to provide fresh loans. But it will take about a week before we actually get the cash, as they are just closed of their books of accounts on Tuesday,” he said.
He informed the Post that the corporation has sought additional financial support of Rs 1.5 billion from the government. A request in this connection was forwarded to the Supplies Ministry earlier this week.
But officials said they did not expect any immediate decision on the matter as the current government was preparing to hand over charge to the incoming administration and might not take financial decisions at this late hour.
ekantipur, 16-Jul-08
The number of four-wheelers plying the capital's roads was reduced to less than half Wednesday as the Nepal Oil Corporation (NOC) sharply cut supplies amid a three-quarter drop in imports due to the lack of funds.
The cutback left commuters stranded at different corners of the Kathmandu Valley while many packed into the few operating buses and three-wheelers (tempos).
The NOC said it distributed 72,000 liters of petrol dividing the stock equally between private and institutional retailers. The quantity is a mere 40 percent of the normal daily requirement.
Likewise, the cash-strapped state-owned petroleum importer distributed 84,000 liters of diesel, which is less than one-third of the valley's daily requirement.
“The situation is very bad. We cannot distribute even half of the required amount of fuel,” said a senior NOC official, preferring not to be named. “Imports from India have gone down to a quarter of what we consume in a day, and we neither have the funds nor anyone to turn to for money to increase imports,” he told the Post.
Sharad Bhandary, general secretary of the Nepal Petroleum Dealers Association, said that only nine private dealers received petrol on the day. “Each received a maximum of 4,000 liters, and that's only enough to create anger and quarrels among consumers rather than satisfying the need,” he said.
Bhandary added that the corporation had not distributed even a drop of fuel to private dealers from Friday to Monday. On Tuesday, it had delivered 1,800 liters to the retailers.
“With that amount of fuel, we became confused over how to distribute it and manage the crowd,” he stated.
NOC officials, moreover, added that the situation could remain bad through this week as it would need a few more days to arrange loans from domestic financial institutions. “A couple of banks have agreed to provide fresh loans. But it will take about a week before we actually get the cash, as they are just closed of their books of accounts on Tuesday,” he said.
He informed the Post that the corporation has sought additional financial support of Rs 1.5 billion from the government. A request in this connection was forwarded to the Supplies Ministry earlier this week.
But officials said they did not expect any immediate decision on the matter as the current government was preparing to hand over charge to the incoming administration and might not take financial decisions at this late hour.
Wednesday, July 09, 2008
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.
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.
Thursday, May 01, 2008
Annual oil losses to touch Rs 8.5b
Annual oil losses to touch Rs 8.5b
eKantipur.com, 30-Apr-08
By Milan Mani Sharma
Monthly loss to hit Rs 1.5 billion NOC's import dwindles as oil loss soars At current prices, petrol costs Rs 87 a liter, gas Rs 1,500 per cylinder Maoists initiate petroleum trade study
The long-running apathy of politicians to revise the petroleum prices has inflicted a whopping oil loss worth over Rs 4 billion during the first nine months of the current fiscal year.
The figure is just an initial estimate, said Bachchu Kafle, deputy managing director of Nepal Oil Corporation, adding that it is the record loss the country has ever had to face in any year in fossil fuel trade. “It's a nightmare,” he told the Post.
But, the nightmare does not end here. Officials keeping track of the international oil prices said worse was still to come, as international oil prices for June delivery settled at US $117 a barrel on Wednesday.
“If the trend is any indication, the country is set to incur an additional oil loss of 4.5 billion over the next three months of the fiscal year, making the annual loss to around Rs 8.5 billion,” said a price expert at the corporation.
Domestic retail prices were set when crude was trading at US$ 94 per barrel in the international market. However, NOC is importing petroleum products at US$ 108 a barrel. “This difference has already cost the country and NOC, the state-owned petroleum import monopolist, a monthly loss of Rs 1.35 billion in April,” said the official. Since the crude prices have scaled upward till June and there is no sign of its easing in July, officials said the country's oil loss will only swell to an average of Rs 1.5 billion a month for the remaining three months of the fiscal year.
“The extent of the rise may vary for individual products, but at US $117 a barrel, the price of petrol will have to be raised to Rs 87 a liter, diesel to Rs 84, kerosene to Rs 69 and liquefied petroleum gas to Rs 1,500 a cylinder,” said the NOC pricing official.
In the present situation, wherein the corporation is already depending heavily on the government's loans for managing imports, further rise in losses is feared to cost to consumers heavy.
“If prices are not adjusted, the shortages will only return to stay. It will be a hopeless situation. The political leaders must make a prudent decision now,” said an official at the supplies ministry.
Failing to generate enough money, cash-strapped NOC has already fallen short on its weekly installment payments to the Indian supplier.
As a result, the Indian Oil Corporation has curtailed supplies by half to about 1,500 kiloliters a day at present. This has caused the queues to return to the refilling stations.
eKantipur.com, 30-Apr-08
By Milan Mani Sharma
Monthly loss to hit Rs 1.5 billion NOC's import dwindles as oil loss soars At current prices, petrol costs Rs 87 a liter, gas Rs 1,500 per cylinder Maoists initiate petroleum trade study
The long-running apathy of politicians to revise the petroleum prices has inflicted a whopping oil loss worth over Rs 4 billion during the first nine months of the current fiscal year.
The figure is just an initial estimate, said Bachchu Kafle, deputy managing director of Nepal Oil Corporation, adding that it is the record loss the country has ever had to face in any year in fossil fuel trade. “It's a nightmare,” he told the Post.
But, the nightmare does not end here. Officials keeping track of the international oil prices said worse was still to come, as international oil prices for June delivery settled at US $117 a barrel on Wednesday.
“If the trend is any indication, the country is set to incur an additional oil loss of 4.5 billion over the next three months of the fiscal year, making the annual loss to around Rs 8.5 billion,” said a price expert at the corporation.
Domestic retail prices were set when crude was trading at US$ 94 per barrel in the international market. However, NOC is importing petroleum products at US$ 108 a barrel. “This difference has already cost the country and NOC, the state-owned petroleum import monopolist, a monthly loss of Rs 1.35 billion in April,” said the official. Since the crude prices have scaled upward till June and there is no sign of its easing in July, officials said the country's oil loss will only swell to an average of Rs 1.5 billion a month for the remaining three months of the fiscal year.
“The extent of the rise may vary for individual products, but at US $117 a barrel, the price of petrol will have to be raised to Rs 87 a liter, diesel to Rs 84, kerosene to Rs 69 and liquefied petroleum gas to Rs 1,500 a cylinder,” said the NOC pricing official.
In the present situation, wherein the corporation is already depending heavily on the government's loans for managing imports, further rise in losses is feared to cost to consumers heavy.
“If prices are not adjusted, the shortages will only return to stay. It will be a hopeless situation. The political leaders must make a prudent decision now,” said an official at the supplies ministry.
Failing to generate enough money, cash-strapped NOC has already fallen short on its weekly installment payments to the Indian supplier.
As a result, the Indian Oil Corporation has curtailed supplies by half to about 1,500 kiloliters a day at present. This has caused the queues to return to the refilling stations.
Sunday, April 27, 2008
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.
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.
Monday, April 21, 2008
‘Do something, anything to end fuel shortage’
‘Do something, anything to end fuel shortage’
eKantipur, 18-Apr-08
The government should come up with new strategies to end the perennial problem of petroleum scarcity, said officials and trade unionists.
“A solution should be found to prevent fuel shortages in the coming days,” said Baburam Rai, president of the Nepal National Employees Association, Nepal Oil Corporation (NOC) section. “The government is funding the NOC from the budget set aside for development projects. This can't last forever,” added the chief of the Maoist-affiliated trade union.
Rai was speaking at a program entitled “NOC's present status and prospects” organized by the union on Friday as part of its Save the NOC Campaign. He said that if there were other alternatives, they should be explored. If jacking up prices is the only solution, the government should say so, he added.
Purushottam Ojha, secretary of the Ministry of Industry, Commerce and Supplies, said serious reforms should be carried out at the ailing corporation to turn it around.
“The NOC's leakage and technical losses should be minimized,” he said. “Depots should be modernized, and oil transportation costs must be brought down.”
Citing an example of Bangladesh which buys petroleum at cheaper rates from Kuwait in return for its workforce's contribution to the economy, he said Nepal needed to make diplomatic efforts and lobby for similar benefits. “The NOC should develop human resources to deal with such matters,” he said.
Secretary Ojha said that the NOC's losses were mounting because of expanding demand at a time when world oil prices were soaring. He added that the NOC was incurring a deficit of Rs 1.35 billion every month.
Following a series of record highs, oil was traded at above US$ 115 a barrel on the international market on Friday.
The NOC owes Rs 10.69 billion to the government and varied financial institutions. The government has already provided the NOC a soft loan of Rs 3 billion to cover its losses. A source said the NOC was asking for another Rs 500 million from the government to pay its Indian supplier.
The corporation loses Rs 22.53 on the sale of every liter of diesel, Rs 5.84 on every liter of petrol and Rs 16.67 on every liter of kerosene. Likewise, its sales price per cylinder of cooking gas is Rs 352 less than its cost price.
eKantipur, 18-Apr-08
The government should come up with new strategies to end the perennial problem of petroleum scarcity, said officials and trade unionists.
“A solution should be found to prevent fuel shortages in the coming days,” said Baburam Rai, president of the Nepal National Employees Association, Nepal Oil Corporation (NOC) section. “The government is funding the NOC from the budget set aside for development projects. This can't last forever,” added the chief of the Maoist-affiliated trade union.
Rai was speaking at a program entitled “NOC's present status and prospects” organized by the union on Friday as part of its Save the NOC Campaign. He said that if there were other alternatives, they should be explored. If jacking up prices is the only solution, the government should say so, he added.
Purushottam Ojha, secretary of the Ministry of Industry, Commerce and Supplies, said serious reforms should be carried out at the ailing corporation to turn it around.
“The NOC's leakage and technical losses should be minimized,” he said. “Depots should be modernized, and oil transportation costs must be brought down.”
Citing an example of Bangladesh which buys petroleum at cheaper rates from Kuwait in return for its workforce's contribution to the economy, he said Nepal needed to make diplomatic efforts and lobby for similar benefits. “The NOC should develop human resources to deal with such matters,” he said.
Secretary Ojha said that the NOC's losses were mounting because of expanding demand at a time when world oil prices were soaring. He added that the NOC was incurring a deficit of Rs 1.35 billion every month.
Following a series of record highs, oil was traded at above US$ 115 a barrel on the international market on Friday.
The NOC owes Rs 10.69 billion to the government and varied financial institutions. The government has already provided the NOC a soft loan of Rs 3 billion to cover its losses. A source said the NOC was asking for another Rs 500 million from the government to pay its Indian supplier.
The corporation loses Rs 22.53 on the sale of every liter of diesel, Rs 5.84 on every liter of petrol and Rs 16.67 on every liter of kerosene. Likewise, its sales price per cylinder of cooking gas is Rs 352 less than its cost price.
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