NOC looks set to morph from debt-distressed to debt-free entity
Consumers will soon not have to pay the additional charges that Nepal Oil Corporation adds to the price of petroleum products to service its debt, as the state-owned petroleum company is going to clear its debt by the end of this fiscal year.
Currently, NOC has been passing on Rs 1.25 per litre on sales of diesel and petrol, Rs 13.25 per litre on aviation turbine fuel and Rs 17.75 per cylinder on liquefied petroleum gas (LPG) to the consumers.
As of today, NOC owes Rs 1.5 billion to the government. According to NOC Spokesperson Mukunda Prasad Ghimire, the state-owned petroleum company is planning to pay back Rs 700 million to the Ministry of Finance on Friday. “After that, NOC will owe only Rs 800 million to the government,” Ghimire stated.
NOC started lessening its loan burden gradually since last fiscal, when it owed a whopping Rs 36.64 billion — Rs 12 billion to the government and the remaining amount to various banks and financial institutions. In the beginning of this fiscal, NOC’s debt stood at Rs 23.88 billion. As of June-end, NOC has cleared debt worth Rs 22.38 billion in this fiscal alone. NOC has cleared 94 per cent of its debt within this fiscal.
The state-owned petroleum company was able to generate profit to the tune of Rs 17 billion last fiscal capitalising on the rampant fall in oil prices in the international market. In this fiscal, NOC’s profit is expected to hover around Rs 2.71 billion, according to annual status of public enterprises tabled at the Parliament.
“After clearing its dues, NOC will remove all the additional charges passed on to consumers with the purpose to generate funds for interest and loan repayment,” as per Ghimire. “We have scheduled to clear all the debt by end of this fiscal.”
This means that NOC is beginning the next fiscal as a debt-free entity.
After clearing its entire debt burden, NOC will be able to distribute bonus to its employees from the profit it has generated. NOC has set aside Rs one billion for bonus distribution from last fiscal’s profit. However, it has not distributed the bonus to the staffers as the Ministry of Finance has barred public entities with cumulative loss from distributing bonuses.
As NOC is set to clear all its debt by this fiscal-end, it will be eligible to distribute bonus from the profit it has garnered as per the provision of Bonus Act, which allows bonus distribution of up to six per cent of the profit to the staffers.
