The state oil monopoly could reduce the imports of petroleum products as it has not been able to pay its sole supplier increasing its debt.
According to the Nepal Oil Corporation (NOC) it owes Rs 1.60 billion to the supplier Indian Oil Corporation (IOC).
The government’s failure in reforming the petroleum sector and also due to the fuel subsidy policy that has been providing subsidy to the urbanites from the budget that should have been spent on education and healthcare facilities of the remote villagers.
Also, neither the government nor the NOC has been able to establish the automatic pricing system that will increase or decrease the prices of petroleum products on the basis of purchasing price. However, increasing ted-tapism inside the corporation and bureaucracy.
Every month, the IOC sends a new rate card for the NOC twice, on the first and 16 according to the Gregorian calender. According to today's list, the NOC is projected to report Rs 1.62 billion loss this month.
Based on the new tariff sent by the IOC today, the NOC incurs a loss of Rs 628 a cylinder of cooking gas, which is projected to total upto Rs 880 million loss from the LPG business alone. Likewise, NOC will incur Rs 13.90 in a litre of diesel making a total loss of Rs 945 million in the diesel business.However, increasing debt has forced it to reduce its imports to decrease the loss.
The strong US dollar and increased price of crude oil also made the state oil monopoly a technically bankrupt institution.
Though, the government has committed Rs 4 billion loan for the NOC, it is not the permanent solution. The Finance Ministry has asked Employee Provident Fund and the Citizens Investment Trust to arrange loans for the NOC.
Most of the people visit their home towns during Dashain festival in October putting pressure on vehicular movements and the increased consumption of petroleum products specially diesel.
As usual, petroleum products continues to be the largest import item for the country as the import jumped to Rs 107 billion in the last fiscal year 2012-13, but the NOC has a total of Rs 28.50 billion outstanding debt.