Bailing out NOC

The state-run Nepal Oil Corporation (NOC) is in dire straits as it is unable to strike a balance with the record high prices of petro products in the international market. It is unable to pay heavy dues to its sole supplier, the Indian Oil Corporation. Given NOC’s weak financial position, all its attempts to seek loans from banks have gone futile. As it is, its bank loans have crossed the Rs 4.44 billion mark. NOC is still reported to lose Rs. 580 million a month and its dues to IOC have already spiralled to Rs. 5.76 billion. If the government does not intervene immediately, the corporation may not be able to import the products altogether, thereby causing acute shortages.

But with the emergence of a promising political scenario and India’s pledge of an economic package, there might be some signs of hope. But NOC must bail itself out by generating its own resources through an automatic price mechanism system on the one hand and by cutting waste and corruption on

the other. Task forces have been formed in the past to improve NOC’s performance, but with little

result. The crude oil prices have shot up in the international market in recent times, and NOC, too, has sharply raised the prices several times. The rising global trends may force yet another bout of price increases. But the government ought to think seriously of reducing the heavy import duties on petro products — e.g. it is Rs. 26 on petrol per litre — rather than raising their retail prices. It is also time to consider options for distributing oil in the country in a more systematic manner.