Deepening shortage of petroleum products - mainly diesel - resulted in long queues of vehicles in front of petrol pumps and forced more than half of the diesel-run vehicles to remain idle in the parking lot. Construction works mainly at major projects and operation of shopping malls have been badly affected due to prolonged fuel shortage. The state-owned petroleum monopolist has been unable to supply half the normal demand for the fossil fuel in the Kathmandu valley.[break]
"Keeping in view the abnormal situation and direction from the government, the CIT board meeting held today (Sunday) took the decision to immediately release one billion rupees to NOC at 12.5 percent interest. We have arranged the payment of Rs 700 million on Monday and remaining amount the following day," Chandra Mani Adhikary, chairman of CIT, told Republica.
CIT, which has already lent Rs 1.13 billion to NOC, decided to sanction the additional one billion rupees against the government guarantee and collateral of lands owned by the heavily-indebted NOC. The new loan has to be repaid within a year.
The capital has been witnessing a short-supply of diesel for last three weeks as NOC´s attempt to obtain loans from banks and financial institutions was taking time. Given an estimated loss of Rs 1.26 billion for December alone, NOC had asked the government about one month back to either allow it to raise the petroleum prices or arrange for money to normalize the supplies by reducing the dues to IOC - the sole supplier to Nepal.
Mukunda Dhungel, NOC spokesperson, said supply of petroleum products will gradually improve from Monday as CIT agreed to provide the loan immediately.
"Normal supply will be restored within a week as we will start to dispatch the money to IOC on Monday," said Dhungel. According to Dhungel, NOC distributed 426,000 liters of petrol, 626,000 liters of diesel and 108,000 liters of kerosene to different petrol pumps in the capital on Sunday. Similarly, NOC dispatched 60,000 liters of petrol, 92,000 liters of diesel and 36,000 liters of kerosene from Amlekhgunj depot for different pumps in the Kathmandu valley.
Amid deepening scarcity of the petroleum products, the government last week agreed to provide guarantee for the loan of Rs 1.5 billion from the Employees Provident Fund (EPF) and Rs 1 billion from CIT for NOC to finance the import from IOC.
However, the release of loans were much delayed due to differences over interest rate. Though CIT decided to release the loan, EPF is still to decide on the interest rate for the proposed Rs 1.5 billion worth of loan to NOC.
NOC officials said problems of short-supply of petroleum products will be averted at least for two months if NOC succeeds to secure loans from both EPF and CIT to reduce its dues to IOC, that have been piling up with every passing month, prompting the Indian supplier to bring down the supplies to Nepal.
The ever-loss making NOC currently suffers a loss of around Rs 19 on a liter of diesel, Rs 7 on a liter of kerosene and around Rs 339 per cylinder (14.2 kgs) of LPG. Its outstanding loans total around Rs 20 billion.
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