“This is a major blow for us, particularly given that we have been consistently suffering loss over the last few months,” said Digamhbar Jha, managing director the state-owned petroleum monopolist. [break]
The new import rates for Nepal that Indian Oil Corporation (IOC) issued to NOC on December 1 suggest that the corporation will suffer a loss of Rs 4.80 on a liter of diesel and 24 paisa on a liter of petrol, if the government did not raise the retail prices.
Previously, it was suffering a loss of Rs 2.75 on a liter of diesel and earning a profit of Rs 3 per liter of petrol.
“The new rates have also raised the loss on liquefied petroleum gas (LPG) to Rs 256 per cylinder (of 14.2 kg),” Jha said, adding, “This will straightaway inflict us a loss of Rs 270 million on LPG alone in December.”
Owing to faulty subsidy on LPG, the popular urban cooking fuel, NOC has already suffered a net loss of Rs 350 million on it over the last three months.
IOC´s new rates have also shrunk NOC´s profit on aviation fuel to Rs 11 per liter and on kerosene to Rs 4.80 per liter. Previously, it was earning a profit of about Rs 14 per liter on aviation fuel and Rs 6 on a liter of kerosene.
Jha said the loss jumped so sharply because the recent decision of the government to double roads maintenance fee alone will increase its financial burden by Rs 200 million every month.
NOC has indicated that the loss could impact supplies. But to avoid such a situation, it has started knocking doors of the government to either raise the retail rates or pledge it loans.
“We can´t manage the impact the loss will have on our import and inventory management. We seriously need concrete decision of the government,” Jha added.
NOC has already informed its situation to the government via Ministry of Commerce and Supplies, elaborating the adverse impact the apathy would have on supplies. It has recommended the government to let it increase the prices of petrol and LPG and hike the prices of diesel moderately.
It has further cautioned that its total inventory of fuel has dropped to around 26,000 KL, as it curtailed imports because of loss over the last three months. Unless the government dealt with the situation sensitively, the supply will be hit, it has cited.
In mid-July, NOC had said its total stock was well over 40,000 KL.
“We could not import adequate volume of fuel in November as well because of loss, which stood at around Rs 70 million,” NOC has said in its report. In December it estimates to face a cash shortfall of Rs 220 million to maintain normal imports.
“This will obviously force us to cut imports,” said Jha, adding that if shortage hit the market, it will be government´s fault and not the NOC´s.
Related story
NOC says it is short of Rs 10 billion to pay to IOC for fuel im...
