The decision comes a day after the Commission for the Investigation of Abuse of Authority (CIAA) directed NOC not to implement its decision of distributing of bonus. [break]
Though NOC had decided to distribute bonus as per the existing Bonus Act and Regulations on the basis of financial performance during 2008/09, we have decided to block distribution of bonus until the accumulated loss is recovered, Digambar Jha, managing director of NOC, said after the meeting.
The meeting has also decided to ask the government to implement the decision.
The amount is equal to the cumulative staff salaries and perks for over 17 months. It had also set aside an additional Rs 184.89 million for staff housing arrangements.
NOC had taken the decision to distribute bonus the fuel monopolist incurring an accumulated loss of Rs 7.92 billion and suffering a negative net worth of Rs 7.63 billion as of the end of 2008/09.
NOC had suffered a loss of well over Rs 22 billion over seven consecutive years till 2007/09. As of the end of fiscal year 2008/09, it had Rs 11.19 billion in outstanding loans to settle with the government, the Employees Provident Fund and the Citizens Investment Trust.
Worse still, NOC´s provisional financial statement for 2009/10 shows it incurring a loss of well over Rs 1 billion. It continues to rely on loans to maintain imports and supplies. Just three weeks ago, it had taken an additional loan of Rs 800 million from the government for maintaining the fund flow.
"Clearly, the money for bonus and housing arrangements should have been used to service the loans and improve the financial health of the corporation," said a source.
However, NOC´s influential managers, who got the bonus endorsed by the board as well as by the recent annual general meeting (AGM), are arguing that staff were entitled to bonus because NOC had generated a profit of Rs 3.31 billion during the year.
Their claim is in line with the Bonus Act, which allows any corporation to distribute bonus of up to 8 percent of profit even if it has a cumulative loss.
However, the Ministry of Finance (MoF) has already tagged this provision as faulty. But its efforts to amend it have not yet yielded results.
Senior MoF officials and consumer rights activists have been opposing the NOC decision tagging it as foul play.
Related story
NOC to distribute Rs 58 million as bonus to its employees
