Bonus can be claimed as per the legal provisions for the year when profit is made, not even for the years when losses were incurred

The management of Nepal Oil Corporation (NOC) has been barred from distributing bonuses to its employees as well as shareholders.

An annual general meeting of the NOC had last week  decided to distribute bonus amounting to about Rs. 2.25 billion. The NOC had allocated this sum to distribute the bonus for the past four years.  However, the parliamentary sub-committee of the Committee on Commerce, Industry and Consumer Welfare Relations has directed the NOC not to distribute the bonus.

The NOC which has a monopoly in importing oil from the Indian Oil Corporation (IOC) at one time was severely debt-ridden.

The loss of NOC amounted to as much as Rs. 36 billion which it owed to the government and several financial institutions. It has finally succeeded in paying up all its dues and is now running at a profit. The NOC is doing well at present particularly since the introduction of the automatic pricing mechanism in 2014.

However, the NOC is alleged to be selling the petroleum products by over-charging its customers particularly when the prices of fuels are decreasing in the international market.

The additional amount the NOC is earning should not be seen as making a profit since the customers have to pay more to buy oil from the NOC. Thus, the sub-committee has done well in preventing the disbursement of bonus by the NOC. The profit accumulated by overcharging the consumers should be used instead  for the price stabilization fund of the NOC.

It should also be invested in the development of the physical infrastructure of this corporation. Besides, the ‘profit’ has been earned by the NOC not by improving its management and functioning efficiently but because of the huge drop of oil price in the international market and setting aside a good margin for itself. No doubt, employees of public corporations are entitled to  bonus if they perform well and earn profits by ethical means as motivations to the staff who deserve it.

The NOC is earning profits by selling different fuels at higher prices even when the IOC has reduced the price of the various petroleum products in the first half of its month.

Furthermore, bonus can be claimed as per the legal provisions for the year when profit is made, not even for the years when losses were incurred as NOC had done or tried to do in the past, nor can it be claimed for the years of loss by appropriating the profits of other years.

But the losses made in the past should be offset first. It should also be determined how much is a fair profit margin for NOC because it is a monopoly and its products are strategic commodities and needed by all sectors. It does not have to compete with anybody else and it has a captive market which is the whole of the population.

Its profit does not necessarily indicate its level of efficiency and effectiveness. Currently, NOC is selling petrol at a profit of four rupees per litre, of Rs.16 per litre of kerosen, and of nine rupees for aviation fuel. Time and again the NOC has been barred from distributing bonus by the lawmakers in the past.

It is right that the NOC is now required to provide all documents of the various transactions made while clearing the debts of almost Rs. 36 billion to the government and financial institutions. This should be done to see if there were irregularities and if they were or were not transparent.

Safe drinking water

The 2011 Census report has shown that over 85 percent of the population had access to water supply, up from 72 percent in 2001. The government has a national target to provide basic water supply and sanitation services to all citizens by 2017.

Looking at its set target, the government is still lagging behind by 15 percent to meet its objective on easy access to water and sanitation services. Most urban centres have access to water supply and sanitation. But rural areas still consider water supply and sanitation services as luxury.

The Ministry of Water Supply and Sanitation has revealed that even the treated piped water becomes contaminated when it is distributed through the supply channels. It is the main challenge that the concerned authorities should focus on addressing the loopholes.

Water distribution system must be developed in a manner that the treated water does not get contaminated when it reaches to household taps. Regular surveillance, monitoring and taking corrective measures of the water supply system are crucial to ensure safe drinking water to all households.