NOC passes burden on to consumers

Kathmandu, August 10

Nepal Oil Corporation has been passing on the cost of building its infrastructure to consumers by charging up to Rs 19 extra on each litre of fuel it sells.

NOC has been collecting Rs 5.76 extra from consumers purchasing every litre of petrol in the name of infrastructure development tariff.

It has also been imposing infrastructure development tariff of Rs 4.95 on sale of each litre of diesel. In the case of per litre sale of kerosene, the tariff has been fixed at Rs 4.88, while in the case of aviation turbine fuel the tariff has been fixed at Rs 18.88 per litre.

The NOC also collects Rs 69.33 as infrastructure development tariff on sale of a cylinder of cooking gas.

In this manner, NOC collects Rs 30.59 million every day in the name of infrastructure development tariff, considering average daily consumption of 983 kilolitres of petrol, 2,905 kl of diesel, 49 kl of kerosene, 331 kl of ATF and 58,493 cylinders of cooking gas.

NOC has been collecting additional tariff in the name of infrastructure development despite generating Rs 29.6 million in profit every day.

NOC has been taking advantage of the steep fall in oil prices in the international market. As the state-owned entity has cleared its entire loan burden, its monthly profit will shoot up to around Rs 2 billion (based on the current pricing and its fuel purchase rate).

NOC started passing on its own infrastructure development cost to the consumers this fiscal after its outstanding dues were cleared. NOC is expected to collect Rs 458.87 million for infrastructure building purpose this fortnight (August 1 to 15).

Earlier too, NOC was passing on its loan and interest rate repayment charge to consumers.

NOC has started passing on infrastructure building cost to consumers without any consent from the government. “The board meeting has not been held after July 8 and we are not aware of NOC’s own infrastructure building tariff being passed on to consumers,” said Shreedhar Sapkota, secretary of the Ministry of Supply, who chairs the NOC board of directors.

NOC has been charging additional cost from consumers to develop its own infrastructure, apart from Rs 5 it charges on the sale of each litre of petrol, diesel and ATF levied by the government through the fiscal budget this year for the development of Budhigandaki Hydropower Project.

On the other hand, NOC has not developed any separate fund for infrastructure development.

NOC has segregated a portion of its profit for infrastructure development purpose so that it will be able to show modest profit growth despite clearing the entire loan burden which stood at Rs 36.86 billion in the beginning of fiscal 2014-15.

Sushil Bhattarai, deputy managing director of NOC, said the tariff being passed on to consumers for infrastructure development was ultimately counted as NOC’s profit in its annual balance sheet.

“Consumers had expected NOC to adjust market price accordingly after the loan burden was cleared because it was passing on around Rs 3 on the sale of each litre of fuel to the consumers to clear its loans,” said Prem Lal Maharjan, president of National Consumer Forum.

“NOC does not need to levy further tariff on consumers for its infrastructure development because the entity has been able to generate profit of over Rs 30 billion in the last two fiscals.”