Kathmandu, May 13:

Government has decided to provide Rs 800 million to the cash-strapped Nepal Oil Corporation (NOC) to maintain smooth supply of petroleum products. However, the grant amount is only 40 per cent of what the state-run petroleum supply utility has asked from the government to pay its due.

Earlier, NOC had asked the government to lend about Rs 2 billion, citing its failure to bear a huge loss in maintaining regular supply of petroleum products. NOC sources further said that it has also demanded the government to revise the prices of all petroleum products.

Mukunda Dhungel, spokesperson at NOC, confirmed that the government has provided a grant of Rs 800 million, which according to him would be paid to the Indian Oil Corporation (IOC). According to him, with skyrocketing petroleum prices globally- the monthly loss of NOC has already crossed Rs 1.67 billion.

Dhungel further said the outstanding dues of NOC has crossed already Rs 13 billion including Rs 6 billion loans it had taken from the government at various times, Rs 2.15 billion from the commercial banks, Rs 2.50 billion from the Citizen Investment Trust (CIT) and Employees Provident Fund (EPF). The outstanding dues that NOC owes to its sole supplier IOC currently stands at Rs 2.50 billion.

NOC has already slashed the daily supply of petroleum products in the Valley by about 50 per cent, citing a failure to pay its dues to IOC — that currently stands at over Rs 2.50 billion — on time. As a result, many private petrol pumps have already pulled down the shutters, while long queues can be seen at petrol pumps.

Dhungel hinted that the crisis could further deepen, unless the government comes up with immediate rescue measures- either hiking the prices or injecting more money to bear the mounting losses.

Meanwhile, the NOC sources said that the corporation has requested the government to initiate all-party talks to immediately revise fuel prices.

According to the NOC proposal, it has recommended the government to make the prices of diesel and kerosene alike and provide subsidy to the students and poor people.

The proposal has also recommended limiting the existing state subsidy on cooking gas to one cylinder per family a month. If a family consumes more than one cylinder in a month, it has to get other cylinders at import price, which will be around Rs 1,430 per cylinder.

The sources further informed that the proposed hike in petrol is Rs 8 per litre, which will make it Rs 88 for petrol from the present Rs 80 a litre.

NOC has already started a dual pricing system in diesel distribution to lessen the loss and is planning to implement the dual pricing in the petrol also.