Kathmandu, January 23
Nepal Oil Corporation (NOC) — the state-owned oil company — has set aside six per cent from last fiscal’s profit of Rs 17 billion as bonus for its employees.
However, it has to be noted that the company still has huge cumulative losses and has had a negative balance sheet since 2002-03, except in 2008-2009. Due to the sharp decline in oil prices in the international market caused by the global financial crisis, NOC was able to generate profit worth Rs 3.31 billion in fiscal 2008-09.
NOC has reportedly allocated Rs 1.02 billion for bonus distribution from the profit of fiscal 2014-15. The state-owned entity was able to make a huge profit because it did not make adjustments in consumer prices based on the international market rates citing that it had to make repayments of its loans and interests.
NOC still owes Rs 23.88 billion in loans, of which Rs 12.64 billion is to the government and the remaining to various financial institutions. In this scenario, NOC’s move to distribute bonus has raised questions on its earlier commitment of reducing its loan burden.
Interestingly, NOC Spokesperson Mukunda Ghimire has said that the corporation has set aside the particular amount under bonus heading only to prepare its balance sheet. “The NOC board, led by the secretary of the Ministry of Supplies, has barred us from distributing bonus until we have cleared the cumulative loss of the company,” Ghimire explained, adding, “We have allocated the amount just to prepare the balance sheet as the Bonus Act allows us to allocate six per cent of profit as bonus.”
“Moreover, the Ministry of Finance has barred public entities with cumulative losses from distributing bonus, so we will not be distributing any bonus,” he assured.
NOC, earlier as well, had distributed bonus worth Rs 1.72 million from its single-year profit in 2008-09 citing the provision of Bonus Act that allows distribution of bonus of up to six per cent of profit. It had capitalised on the fact that the law is silent about cumulative loss incurred by a company.
However, employees had to later return the bonus after the Commission for the Investigation of Abuse of Authority (CIAA) filed a charge sheet against the senior staffers who were involved in the decision. But the Special Court gave a clean chit to the senior staffers in the first week of June last year.
Nonetheless, NOC management paid a hefty price for ignoring the CIAA’s directive, as the anti-graft body raided its office in 2013 and filed a graft case in 2014 against 20 senior-level employees after further investigation. The court, nevertheless, passed a decision in favour of NOC because the employees had returned the bonus after the CIAA raid.
As NOC has already allocated Rs 1.02 billion for bonus distribution, it would be a major headache for the NOC board and MoF to make sure that the money is not actually distributed. The Bonus Act allows bonus allotment within eight months of the fiscal year. As NOC has already allocated the amount for bonus allotment, it is yet to be seen if things will be different this time around or if the NOC management will repeat its earlier mistake again.
A version of this article appears in print on January 24, 2016 of The Himalayan Times.