NOC bends rules to share storage facility with pvt company

Kathmandu, December 1

Instead of seeking viable alternatives for easing fuel supply, Nepal Oil Corporation (NOC) officials seem determined to bend the rules to capitalise on this dire situation.

While none of the private players that had taken licence from NOC have been able to import and distribute fuel, the state-owned petroleum supply monopoly, today, decided to share its storage facility with privately-owned Malika Petroleum Company.

With this decision, NOC has breached the provision of the gazette notice published on October 11 that invited private players to import and distribute petroleum products. The notice had clearly mentioned that the firm that would be involved in petroleum business would need to have its own storage facility. According to the gazette notice, the firm should have at least 14,000 kilolitres of storage facility for diesel, petrol (5,000 kl) and kerosene (1,000 kl).

After the notice was published, altogether 11 companies — including Malika Petroleum — had received the licence. But even as nearly two months have passed by since, NOC continues to be the sole importer and distributor of fuel in the country.


A high-level source at NOC confirmed that Malika will pay NOC for utilising its storage. “But there is no provision to allow the private sector to use NOC’s storage facility,” the source added, speaking on the condition of anonymity due to sensitivity of the matter.

The two parties are yet to decide on the amount that Malika will have to pay — per kilolitre of fuel per day — for using NOC’s facility.

Dipak Timalsina, chairman of Malika Petroleum Company, is also an investor in Smart Telecom. Minister for Supply Ganesh Man Pun had put pressure on NOC’s Managing Director Gopal Bahadur Khadka to allow the private company to share its storage facility, according to the NOC source.

Timalsina confirmed that they have obtained the licence to import petroleum products and are planning to import fuel from India. He said that his company might use the storage facility of NOC temporarily but in the long run, the firm plans to develop its own storage.

“We are exploring suitable locations to set up storage in Chitwan and Makawanpur districts,” said Timalsina.

Meanwhile, NOC Managing Director Gopal Bahadur Khadka submitted his clarification on various issues to Commerce Secretary Naindra Prasad Upadhyay on Monday evening. The NOC board led by Secretary Upadhyay had sought clarification from Khadka regarding NOC’s deal with a privately-owned company Birat Petroleum and how fuel tankers were dispatched to his preferred fuel pumps and industries in his sole discretion by breaching the rules.

Khadka had signed a contract with Birat to purchase petrol and diesel at a rate that was almost double the existing market price and had released payment to the latter to import fuel. Birat had unilaterally scrapped the contract with NOC on November 8 after the news of the agreement came to light and oversight agencies began investigating the matter.

NOC’s next board meeting will decide Khadka’s fate.