However, affairs at the state-owned petroleum monopoly suggest something else. Audited financial statement of the corporation shows that its total administrative cost, contrary to people´s aspirations, jumped by a whopping 43 percent to Rs 393.80 million in 2007/08 and further six percent to Rs 418.22 million in 2008. [break]
“Such a sharp rise in cost of operations shows how inefficiency and leakage has ballooned in the corporation. It also highlights to what extent reforms has derailed there,” said an official at the Ministry of Commerce and Supplies (MoCS).
Breakdown of overhead costs shows that the corporation mainly witnessed 27 percent rise in its employees´ salary and perks in 2007/08, a year before the government actually hiked them. In 2008/09, the cost further escalated by 17 percent -- higher than the government´s hike rate -- to Rs 158.81 million.
“Salary and perks soared during those years because we hired new employees and made temporary staffs permanent,” NOC Chief Digambar Jha told myrepublica.com.
Sources in the corporation, however, said that only a handful of new recruits actually served the corporation´s requirement, whereas majority got the job because they were cadres of political leaders, mainly Minister for Commerce and Supplies Rajendra Mahato.
“Records show that the corporation had become a job placement site for political leaders during those years,” said a source. Worse is; the trend still continues.
Analysis of administrative costs further shows that the corporation´s travel expenses jumped some two-thirds to Rs 12.88 million in 2008/09 from Rs 7.88 million in the year before.
Operating expenses too almost doubled to Rs 7.49 million in 2008/09 from Rs 3.91 million in the previous year. NOC also recorded well over two-thirds rise in advertisement costs (to 7.48 from Rs 4.39 million) during the year.
Officials said advertisement cost rose because the corporation escalated its advertisement drive in order to sensitize people on international pricing and its losses during the high crude price era.
“But in the profit making period, this cost clearly should have gone down. Unfortunately, that has not been the case,” said the source, raising question over meaningfulness of such advertisements.
Even Commission for Investigation of Abuse of Authority had tagged such a rise in advertisement cost as abuse of authority and instructed the corporation to refrain from placing meaningless advertisements.
Apart from them, the corporation also recorded well over three-fold rise in business promotional cost to Rs 3.37 million in 2008/09 from Rs 1.06 million of 2007/08.
Experts noted that such rise in administrative cost tips off how inefficiency has increased in NOC over the last few years.
“This is reversal of reforms we pushed for not so long ago. It has only burdened consumers with undue additional costs,” said Jyoti Baniya of Nepal Consumers Rights Forum, urging the government to instigate reforms in the petroleum monopoly.
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