“India has responded positively to our request for credit guarantee up to Rs 3 billion for two months,” said Commerce Secretary Purushottam Ojha. He also informed that Indian Oil Corporation (IOC) -- the sole supplier of fuel to Nepal -- has said that it will start exporting 4,600 kiloliters (KL) of fuel to Nepal Oil Corporation (NOC) every day from Wednesday. [break]
The supply promised by IOC is higher than normal daily demand of Nepal, which stands at 4,400 KL.
Amid deepening fuel scarcity due to the lack of cash to finance oil imports, the government had requested India for credit facility on Sunday. The shortage has been troubling general consumers for the past three weeks, particularly after IOC cut supplies by one-third after loss-making NOC did not pay enough cash to finance normal import.
Apart from IOC´s credit facility, Ojha said the government would also provide Rs 2 billion in loans to NOC from Employees´ Provident Fund.
“Customers can relax now. The fresh arrangements mean fuel scarcity will end within a couple of days,” Ojha told Republica.
However, these developments have pushed the issue of price adjustment in line with international trend at bay.
“This could be dangerous because after two months we will have Rs 3 billion in dues to settle to India and also no cash to finance imports,” said an official at the Ministry of Commerce and Supplies (MoCS).
Officials at MoCS as NOC said the government should also adjust domestic fuel prices to avert looming fuel crisis.
As per the latest price quoted by the IOC, the state-owned petroleum monopolist is presently incurring a loss of Rs 2.07 billion (about $30 million) in May. The accumulated loss of the troubled NOC has jumped to over Rs 15 billion ($210 million), almost four times its current assets.
Continued reluctance of the political leadership to adjust domestic oil prices with the international price has been one of the main reasons behind the ballooning NOC losses. International crude price has lately touched $124 per barrel, up from $82 per barrel recorded six months ago.
NOC is currently suffering a whopping loss of Rs 8.01 and Rs 23.42 per liter in petrol and diesel respectively. Similarly, the loss per liter on kerosene has gone up to Rs 13.61 and per cylinder (14.2 kg) of cooking gas to Rs 322.06. It is enjoying a profit of Rs 7.06 per liter in aviation fuel.
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