KATHMANDU: Two financially ailing state bodies — Nepal Oil Corporation (NOC) and Nepal Electricity Authority (NEA) — have bled the government coffers dry.
The government has failed to meet its revenue target due to the failure of NOC and NEA to pay back, finance secretary Krishna Hari Baskota said, adding that the hugely indebted state oil monopoly — that has still been asking for some Rs 2 billion for the smooth supply of petroleum products — and Nepal Electricity Authority’s poor performance hit the non-tax revenue mobilisation directly hurting the total revenue mobilisation.
The Asian Development Bank (ADB) has also mentioned that the economy has suffered from several market distortions due to the fragile political environment compounded by the poor law and order situation.
“Electricity theft and technical leakages — that amounts to 29 per cent of total output — business cartels, fuel hoarding and frequent shortages, and transport syndicates are responsible for exacerbating the already poor investment climate,” according to a flagship report of ADB that has attributed the snail-paced reform of the state oil monopoly to the chronic fuel shortages.
The government’s populist decision and untransparent state oil monopoly that distributes freebies to leaders has put NOC on a death bed.
Though the government is planning to recruit a professional managing director, the problem cannot be sorted out without a complete deregulation of oil prices and a legal provision to allow the private sector into the petroleum business with a well directed social protection policy that could make Nepal Oil Corporation cover its own operating costs and make a reasonable return on the government’s investment, it added.
“These two institutions were supposed to pay the government some Rs 10 billion apart from the interest,” said Baskota. “Had these institutions been able to pay back, the government would have exceeded its revenue mobilisation target for the current fiscal year,” he added.
The Finance Ministry had targeted to mobilise Rs 247.60 revenue, an increase of over 20 per cent as compared to the last fiscal year but it has been able to mobilise Rs 172.90 billion by the end of Chaitra (mid-April) that is however, only an 18.1 per cent increment as compared to the same period of the last fiscal year. “There is still a shortfall of Rs 2.22 billion of the target for the nine months of the current fiscal year,” according to Baskota, who attributed the shortfall largely to NOC and NEA.
Of the total revenue target, non tax revenue target for the current fiscal year stands at Rs 36.94 billion and by the end of nine months, the government has been able to mobilise Rs 25.25 billion, a shortfall of some Rs 2 billion from its target of Rs 27.25 billion for the month ending Chaitra.