NOC loss set to jump to Rs 1.33b

KATHMANDU, March 3:  Nepal Oil Corporation (NOC) - the state-owned petroleum import monopolist -- has announced that its loss will jump to Rs 1.33 billion in March from Rs 1.13 billion in February, as its Indian supplier jacked up the supply rates for Nepal amid soaring crude prices.



Referring the new supply rates issued by the Indian Oil Corporation (IOC) on Tuesday, NOC Spokesperson Mukunda Dhungel said that the corporation at the present retail rates is set to suffer a loss of Rs 7.76 on a liter of petrol. “Worse still, our loss on a liter of diesel has jumped to Rs 14.27 per liter,” he told Republica on Tuesday. [break]



Given that diesel makes more than two-thirds of the total fossil fuel Nepal consumes, Dhungel said NOC is poised to suffer a loss of Rs 998.85 million on diesel trade alone.



NOC, which was earning profit on kerosene so far, will now suffer a loss of Rs 4.90 on a liter of kerosene. Its loss on liquefied petroleum gas (LPG) remains unchanged at Rs 254.77 per cylinder (14.2 kg).



The new import rate has also slashed NOC´s profit on Air Turbine Fuel (ATF) to Rs 6.20 per liter.



The latest rise in import rates has raised problems for NOC, which has been largely relying on government loans to finance imports. It has also raised concerns for Ministry of Finance (MoF), particularly as consistent rise in NOC´s loss is exerting severe pressure in its fiscal management.



MoF had just recently approved a fresh loan of Rs 1.13 billion to the cash-strapped corporation to maintain imports. But the fresh rates have created yet another gap on fund flow of the corporation.



Given the situation, both NOC and MoF officials agree that there is no option but to adjust domestic petroleum prices if the country is to escape pressure on the fiscal front and prevent fuel shortage in the market.



“There is an urgent need to adjust fuel prices, particularly of petrol and diesel,” said Dhungel.



MoF too has urged NOC to instantly raise the price of petrol, making it equal with retail rates of petrol in the southern neighbor. This means, NOC will need to hike petrol price by Rs 10.73 per liter.



“Plugging the price gap on petrol alone will not help. We will have to increase the price of diesel and LPG as well,” said an official at Ministry of Commerce and Supplies.



But given the current level of inflation, which stand at 11.3 percent, and the absence of full cabinet, concerned officials doubt they will be able to addresses NOC´s concern soon.

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