PM Koirala promises Rs 1bn loan for NOC

Kathmandu, May 23:

Prime Minister Girija Prasad Koirala has promised that the government would provide over Rs 1 billion loan to Nepal Oil Corporation (NOC) to ease its mounting dues and help it import more fuel to normalise the fuel supply.

The assurance came after the cash-strapped NOC on Thursday warned of an acute shortage of petroleum products in the country, if the government failed to hike the petroleum prices or grant loan.

NOC had said that sale and distribution of petroleum products was likely to come to a grinding halt as it was running out of stockpile. NOC officials had informed that they have petrol, diesel and kerosene available for only six more days and air turbine fuel for another eight days.

Minister for Industry Commerce and Supplies Shyam Sundar Gupta met PM Koirala at his official residence in Baluwatar this morning with the proposal to grant extra loan to the NOC to maintain a smooth import of fuel. “I apprised the Prime Minister about current state of petroleum supply and NOC’s financial health,” he told this daily.

According to minister Gupta, the finance ministry is due to grant the loan within the next few days after the Prime Minister’s directive. “We had proposed to grant about Rs 2 billion, but the finance minister agreed to grant over Rs 1 billion,” he said.

Last week, the government had provided Rs 800 million to the NOC.

The NOC has been claiming of huge losses as it has been forced to sell the fuel at less than the cost price despite skyrocketing crude prices in the international market.

As per the latest prices sent last week by the Indian Oil Corporation (IOC), the sole supplier of petroleum products to NOC, the latter’s monthly losses have reached the highest ever peak at Rs 1.78 billion.

The crisis has worsened after the Indian Oil Corporation, the sole supplier of petroleum products to Nepal, cut the fuel supply after NOC failed to clear its dues to IOC. The outstanding dues that NOC owes to IOC stands at Rs 2.45 billion. The outstanding dues of NOC has already crossed Rs 14.44 billion including Rs 7.30 billion loans it had borrowed from the government. It has also taken loans worth Rs 2.15 billion from the commercial banks, Rs 2.54 billion from the Citizen Investment Trust and Employees Provident Fund.