Keep HQ as collateral for loan, NOC told
NOC's outstanding dues to IOC have ballooned to around Rs 22 billion
Published: 12:10 pm Jun 30, 2022
KATHMANDU, JUNE 29
The Nepal Oil Corporation has been advised by the Ministry of Finance to make necessary preparations to request a loan by putting up its headquarters as collateral, as the NOC is reeling under mounting debt in the wake of surging prices of petroleum products.
According to NOC Spokesperson Binit Mani Upadhyay, the corporation had requested for a loan of Rs 3 billion from the government about three months ago.
Based on the proposal, the Ministry of Finance sent a letter to the NOC yesterday asking it to start necessary preparations for a loan request from the Rastriya Banijya Bank by putting up its central office building as collateral.
'We had requested a loan of Rs 3 billion from the government which seemed sufficient to tide over the crisis. However, our outstanding dues with the Indian Oil Corporation have now ballooned to around Rs 22 billion, which has added to the pressure we are facing. Further discussions regarding the process of approving loan will be held in the coming days,' Upadhyay told THT.
Meanwhile, the MInistry of Finance Spokesperson Dhundi Prasad Niraula said he was unaware of the letter sent to the NOC, indicating that further concrete discussions are yet to take place regarding the loan approval process. Rastriya Banijya Bank officials could not be reached for a comment despite repeated calls.
Upadhyay was of the view that even if the loan request of Rs 3 billion were to be approved, it would barely scratch the surface of the problem.
Prior to the recent cut in prices of petrol and diesel in the domestic market, the NOC had estimated a monthly loss of Rs 4.70 billion and a cumulative loss of around Rs 55 billion by mid-July. On June 25, the government had lifted taxes levied on fuel despite facing heavy losses in an effort to offer some respite to the general public grappling with the rise in fuel prices. The NOC is facing a loss of Rs 2.28 billion every month in the sale of LPG cylinders alone.
A version of this article appears in the print on June 30, 2022, of The Himalayan Times.