NOC to ask IOC for tax reduction

Nepal Oil Corporation (NOC) during the talks with its sole petroleumproducts’ supplier Indian Oil Corporation (IOC) planned the end of this month is focusing on reducing unwarranted tax burden on import.
During the talks for revision of agreement between NOC and IOC, we will focus on reduction of tax burden, said commerce and supplies secretary Purushottam Ojha. “Price Adjustment Factor between the two parties has become one of the disputable issues in recent years.”
The High Level Committee led by lawmaker Bhim Acharya had recommended the government to start homework to revise current agreement with IOC.NOC has been paying more money and bearing unwarranted tax burden due to unjust Price Adjustment Factor (PAF), the report had claimed, suggesting the government that Import Parity Price is not justifiable. “It would be beneficial to Nepal to import fuel on the basis of Export Parity Price,” the report, prepared to reform state oil monopoly and overall petroleum business, has recommended.
The ministry is also committed to implement the recommendations of the report, Ojha said, adding that Nepal wants Export Parity Price in the revised agreement with IOC, instead of current provision.
However, Indian Oil Corporation is not in a mood to implement Export Parity Price, according to an official at the Nepal Oil Corporation (NOC).A team from IOC that has recently visited Nepal and held discussions with the NOC officials opined that that it was charging refinery cost to the Nepal Oil Corporation.
But, Nepali side is convinced that the current provision has to be changed and the tax ceiling and refinery charges should be reduced in the revised agreement.“Nepal Oil Corporation will put its best effort to reduce current charges on fuel import,” the commerce and supplies secretary, who is also the chairman of Nepal Oil Corporation, added. The ministry will express its concerns during the talks between the Nepal Oil Corporation and Indian Oil Corporation, he added.
Nepali team is visiting India to renew the existing agreement signed between NOC and IOC in 2007. Ministry of Commerce and Supplies is doing its homework for the renewal of agreement.
The ministry has formed a team including a joint secretary of the Finance Ministry and a board member of the state oil monopoly for the final preparations for the licence agreement.
The state oil monopoly and Indian Oil Corporation had signed a five-year contract agreement on March 31, 2007 to import petroleum products from Indian Oil Corporation.