Under the decision, Minister without portfolio Barsha Man Pun said the state-owned petroleum import monopolist will get Rs 1 billion from Citizens Investment Trust (CIT) and Rs 600 million from Employee Provident Fund (EPF) and remaining Rs 500 million from the government.[break]
For the fund, the corporation will need to pay interest at more than 9 percent per annum. And on receiving it, the corporation´s outstanding loans will jump to more than Rs 25.25 billion.
“The fund will relieve us greatly, for we will at least be able to pay a chunk of dues that we owe to the Indian Oil Corporation and also maintain imports at the required level,” said NOC Spokesperson Mukunda Dhungel.
NOC records shows, the corporation has around Rs 2.7 billion to pay to the Indian supplier for additional supply it received till April end. And IOC had cautioned it could cut the supply if NOC did not start settling the dues.
Following such warning, the Cabinet on Tuesday had promptly endorsed the Ministry of Commerce and Supplies´ (MoCS´) proposal to issue the new loans to the NOC.
Though Ministry of Finance (MoF) had been favoring adjustment of retail rates instead of issuing fresh loans to NOC, it agreed to MoCS proposal. “We had no other option. The government is adamant at keeping prices unchanged; scarcity, on the other hand, continued to hurt individual productivity, industrial output and development works,” said a MoF official.
Such constant effort of the government to avoid unpopular price hike decision has already caused NOC a loss of around Rs 17 billion over the span of about two years.
Lawmakers in the parliament have been resisting diesel price hike citing it will push up inflation and affect the low income groups. And students unions are against adjustment of liquefied petroleum gas (LPG) because they believe it is poor man´s fuel.
As a result, of the total Rs 1.14 billion of estimated loss for May, LPG business alone is projected to deplete NOC´s fund by Rs 718 million, that is 63 percent. Likewise, loss from diesel too stands high at Rs 689.2 million a month.
The pressure to maintain constant price for industrial and popular cooking fuel, meanwhile, has forced consumers of petrol, kerosene and aviation fuel pay more for the fuel.
Worse still is that the loans will not address NOC´s and consumers plight for long. “This is simply not a sustainable approach. Only thing that can end scarcity forever is adjustment of fuel prices in line with import rates, as only that can enable NOC to import as much fuel as consumers demand,” said Dhungel.
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