NOC has allowed bottling companies to sell cylinder by taking a maximum of Rs 28 as profit. [break]The state-owned fuel monopolist has been suffering a loss of Rs 104 per cylinder in the name of providing the cooking fuel to consumers at lower price.
The government had provided a subsidy of Rs 1.7 billion for LPG in the last fiscal year.
Records of NOC, which has been kept confident so far, reveal that bottling companies were making a huge profit as their actual expense on different expenditure heads is lower that what NOC has approved.
“Gas companies are making profit in different expenditure heads such as transportation fare from Barauni, local delivery cost to dealers, working loss and overhead costs, in addition to their regular profit margin,” a highly placed NOC source told Republica.
NOC has been bearing Rs 80 per cylinder for transportation from Barauni refinery to Kathmandu, Rs 25 for transportation from bottling plants to dealers, Rs 50 for overhead expenses and Rs 28 as profit to dealers.
Records show, companies are making a profit of Rs 28 per cylinder on transportation from Barauni to Kathmandu, Rs 25 on local transportation, Rs 1.39 on working loss and Rs 25 on overhead cost, apart from the profit of Rs 28 allowed by NOC.
The companies are also making profit from the residue paste segregated at the bottom of the gas cylinder as they are filling low volume of gas in the cylinder.
“Gas companies were supposed to provide gas to customers at fair price with the arrival of new companies. However, they are exorbitantly fixing price by forming a cartel to make huge profit,” the source added.
NOC has been providing Rs 110,500 per bullet (gas tanker) as transportation fare to bottling companies for delivering LPG from Barauni refinery to Kathmandu. But it has been revealed that bottling companies pay only Rs 75,600 per bullet as transportation fare.
Digamber Jha, managing director of NOC, agreed that bottling companies were getting more facilities from NOC as compared to their actual expenses. “We are compelled to pay the transportation fare claimed by them in the absence of effective bidding among the companies to fix the fare,” Jha added.
Private bottling companies are enjoying monopoly as NOC do not have its own bottling plant to intervene the market.
More investors are putting money in gas bottling plants in recent years because of handsome return it promises at low investment. A total of 31 LPG bottling companies, having the production capacity of more than 4 million cylinders a year, are operating in the country.
About Rs 2 million is required to set up a bottling plant, excluding the cost of land for the plant, according to the investors.
Related story
NOC hikes prices of LPG gas cylinder by Rs 200 and petrol, dies...
