Commerce minister Shankar Prasad Koirala accepted that the state-oil monopoly could not be improved due to its unprofessional approach of operation.
Addressing the 44th anniversary of the Nepal Oil Corporation (NOC), he said that all the efforts of improving the financial and physical status of the corporation failed. "The corporation is doing a loss making business – that is exceptional in the world – as it buys fuel in higher price and sells in lower price," he said, adding that the corporation has to be competitive and should trade in market price. "However, the incumbent government has been formed for the special purpose of holding the election and should not be expected a lot from it."
Likewise, the two-colour cooking gas cylinder will help prepare a framework for the structural reform, Koirala added.
The technically bankrupt state oil monopoly has been borrowing at higher interest rates to pump in cash for the smooth supply of the petroleum products as it has been incurring losses. "The interest rate the corporation is paying is higher," the minister said, hoping that the government will help find solutions to it. The NOC that has a monthly loss of Rs 2.07 billion has Rs 33.66 billion cumulative loan from various banks and financial institutions. But by the end of this month, the NOC is going to add Rs 1.85 billion losses, and Rs 1.60 billion loss is only due to cooking gas that the NOC is selling in Rs 1,143.01 per cylinder loss.
There is no option to bring competition in the petroleum business to make the oil corporation more efficient, said chairman of the NOC and secretary at the Ministry of Commerce and Supply.
The traders, on the occasion, blamed the government policy and intention for the current status of the oil corporation that has 98.38 per cent government stake.The employees, however, blamed the government for its current losses and also due to delay in starting reforms in the petroleum business. The NOC has currently 641 employees.