Kathmandu, November 8

With oversight agencies raising questions over Nepal Oil Corporations’ petroleum products purchase deal with privately-owned Birat Petroleum Company, the company today unilaterally cancelled its deal with the state-owned petroleum supply monopoly.

NOC had inked a pact with Birat Petroleum in the third week of October to purchase petroleum products at nearly double the existing market price and had also released Rs 200 million to the company to open a letter of credit in a bid to import fuel. The company had said NOC could recover the released amount through bank guarantee.

Birat Petroleum was selected through a global tender.

Reportedly, the prices quoted by Birat was the lowest among the other aspirant suppliers. Birat had quoted Rs 199 and Rs 187 for each litre of petrol and diesel, respectively.

It had mentioned in its bid that it would purchase fuel from Bharat Petroleum’s Siliguri depot. And as per the deal, NOC is obliged to purchase fuel from Birat.

Two parliamentary committees — Public Accounts Committee and Industry, Commerce and Consumer Welfare Committee — recently sought clarification from NOC and instructed the government undertaking to furnish all details to the committees.

The House panels have concluded that NOC’s deal with Birat Petroleum Company was shocking, and was made in breach of the existing laws. They also said that it would be expensive and hit consumers hard.

After all the developments regarding the deal came to the fore, Birat Petroleum today said it has cancelled its deal with NOC.

Issuing a statement, Birat said it will import and distribute petroleum products on its own.

Now NOC will not be obliged to purchase petroleum from Birat after the latter announced cancellation of the deal, according to NOC officials.