NOC loss jumps Rs 1.55b

REPUBLICA
KATHMANDU, March 20: Nepal Oil Corporation (NOC) said its loss for March has further jumped to Rs 1.55 billion despite double-digit hike in the prices of petrol and aviation fuel last week as Indian Oil Corporation (IOC) again revised its supply rates for Nepal amid soaring crude prices.

The rise in price had brought NOC´s monthly loss down to Rs 1.14 billion. But IOC´s new supply rates as of March 16 have yet again widened the loss by Rs 410 million, said NOC Spokesperson Mukunda Dhungel.


IOC jacked up rates of petrol and diesel by about Rs 4 and Rs 4.50 per liter respectively. "The domestic price hike had helped us plug the loss on petrol. But rise in import rate has created a hole again. This has subjected us to a loss of Rs 4.30 per liter," said Dhungel.

The loss on diesel is still worse as the government has long turned deaf ear to the price adjustment calls for the fuel fearing inflationary impact. Loss on diesel has now jumped to Rs 19.29 per liter, shows NOC records.

Given that diesel makes up for more than two-third of the total fossil fuel Nepal consumes, Dhungel said NOC is set to suffer a loss of Rs 1.35 billion on diesel trade alone.

NOC, currently, suffers a loss of Rs 4.90 on a liter of kerosene and Rs 254.77 on a cylinder (14.2 kg) of liquefied petroleum gas (LPG).

Together, these products subject the country to a loss of over Rs 274 million.

The only product generating profit for NOC at present is aviation fuel. Following the Sunday´s hike, the corporation is going to earn a profit of over Rs 130 million from aviation fuel in March.

The fresh rise in oil loss has deepened problems for NOC, which was already relying heavily on government loans to finance imports. Soaring and consistent loss -- a result of imprudent oil price management -- will trouble the government as well, exerting severe pressure in its fiscal management.

"Such a situation was looming, especially, as the government never cared to pay heed to experts´ call to adopt automatic pricing mechanism, under which prices are regularly adjusted in line with international trend," said an official at Ministry of Commerce and Supplies.

High-level commissions and experts have repeatedly urged the government to adopt automatic pricing mechanism, arguing that the country simply cannot afford oil subsidy.

However, the government refused to implement the advice fearing protests from consumer organizations and students. "But what the government refuses to acknowledge is the fact that failing to adjust prices too will not save it from consumers´ ire because in such a situation supply is inadvertently affected," said the source.

He disclosed to Republica that given the unmanageable high loss, NOC has already started cutting down the import of diesel and LPG. Although Dhungel refused, sources at the corporation said that NOC is importing only half the normal volume of diesel at present and has reduced LPG import by one-third.

"It has not affected the supply so far. But if the situation continues, consumers eventually will face the scarcity," said officials at Nepal Petroleum Dealers Association (NPDA).