“We are providing money to subsidize oil bill by siphoning off development budget allocated for Rural Area Professional Development program,” said an official at Ministry of Finance (MoF).[break]
NOC Chief Digambhar Jha signed the loan agreement on Sunday.
With the fresh cash injection, Jha said NOC will instantly step up imports and pump out more fuel in the market to end fuel scarcity at the earliest.
Fuel scarcity had hit consumers since last Wednesday after NOC curtailed supplies to market by one-third, citing low import. On Tuesday, Jha had announced that Indian Oil Corporation (IOC) was curtailing supply by 33 percent, attributing it to NOC´s inability to pay enough to its sole supplier.
“How can we make normal supply when our supplier itself has cut exports to us by one-third?” Jha questioned at a program on Sunday.
As a result of short supply, more than 75 refilling stations in the capital on the day displayed ´No Petrol´ and ´No Diesel´ signs. Serpentine queues were visible in some 25 pumps that distributed fuel on the day.
While consumers vented ire over sudden shortage of fuel, pump operators said they faced a tough time managing the crowd and supply.
Although Jha expressed commitment to ease supplies soon, NOC officials said consumers might need to brave shortage throughout this week, as it will take at least few days to make payment to IOC.
Jha said fresh loans would help it end scarcity for now. But he was quick to add that it has not permanently solved problems that NOC has been facing.
“Our loss jumped near to Rs 2 billion for this month. If the government did not show prudence on pricing front, we will again have to knock the doors of MoF within a month,” said Jha.
According to fresh import pricing that IOC issued on Friday, NOC´s loss on diesel has jumped to Rs 23.26 a liter. Similarly, loss on petrol and kerosene has increased to Rs 6.30 and Rs 11.25 per liter respectively. At present retail rates, NOC´s loss on liquefied petroleum gas (LPG) stands at Rs 288.86 per cylinder (14.2 kg).
“Clearly, our economy cannot afford such a huge loss,” said Jha, and suggested the government to endorse its proposal in which it has proposed sharing loss equally among the government, NOC and consumers. He suggested the government to cover its share by lowering tax rates.
As for consumers´ share, he said NOC will hike rates to recoup 33 percent loss from consumers. “We will bear the remaining amount by earning profit from petrol and aviation fuel,” said Jha.
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