Fuel import rates drop

KATHMANDU, Sept 4: Drop in crude prices has dragged down import cost of petroleum products for September. Officials said it will enable Nepal Oil Corporation (NOC) to earn a profit of Rs 200 million during the month.



According to import pricing that Indian Oil Corporation (IOC) imposed from September 1, NOC is now earning a profit Rs 7.30 per liter of petrol at the existing retail rate. Also, it is enjoying a profit of 40 paisa per liter of diesel. [break]



Otherwise, diesel, which commands some 60 percent weight in total petroleum trade, used to generate second biggest loss for the corporation. In the last fiscal year, diesel had caused NOC a loss of about Rs 1 billion.



Likewise, the corporation is now enjoying profit of Rs 8 per liter of kerosene and Rs 15 per liter of aviation fuel.



Because of the policy of the government to fix the price of kerosene at par with diesel, the corporation has ever enjoyed handsome profit on kerosene over the last one and a half years. In recent years, it has also adjusted prices of aviation fuel now and again to extract profit on it.



However, the corporation still suffers a loss Rd 50 per cylinder (14.2 kgs) of liquefied petroleum gas (LPG).



Despite being widely criticized as a faulty policy, the government has continued to subsidize LPG consumed by relatively better off households and businesses. This had cost the corporation a loss of over Rs 1.70 billion in the last fiscal year alone.



“Good thing, though, is its loss margin has now gone down to Rs 50 per cylinder from around Rs 150 per cylinder a month ago,” said NOC chief Digambar Jha.



Talking to myrepublica.com, he stated that the corporation estimates to earn a profit of Rs 200 million in September due to the crude price changes. However, he ruled out transferring the price benefit to consumers.



“Our priority for now is to continue the payment of outstanding loans and also build stock of fuel,” said Jha.



Records show, the insolvent corporation still has outstanding loans of over Rs 11 billion that it has to repay to the government and financial institutions.



Officials, who attributed the poor financial health of the corporation to the faulty policy, argued that emergence of favorable pricing situation has created an environment for the government to correct its faulty subsidy policy on gas.



“Raising Rs 50 will not be a problem if the government wants,” said another official at the corporation.



But Jha preferred to remain mum on the issue. Referring to low import rates, he rather noted that it was perfect time for the corporation to build stock.



“With festive season approaching fast and winter following it, the demand will jump substantially. Hence, it is crucial for us to replenish stock,” said Jha. He stated that the corporation was mulling arranging additional loans of Rs 500 million from bank and financial institution to buy additional fuel for stock.

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