NOC’s profit increases by Rs 4 billion despite the pandemic

 Welcome to the journey towards socialism as the state-owned entity earns hefty profit – where consumers get nothing – and private enterprises are directed to share their profit and spend in corporate social responsibility (CSR).

The state-owned Nepal Oil Corporation (NOC) has earned Rs 12.87 billion profits in the last fiscal year 2019-20 – compared to Rs 8.75 billion profit in the fiscal year 2018-19 – though consumers get nothing from the hefty profit of the state-oil monopoly.

The corporation last fiscal year paid Rs 66.88 billion as revenue – by trading fuel – to the government. It has last fiscal year imported 2.5 million kiloliters (kl) of fuel worth Rs 205 billion, which is 11 per cent less than a fiscal year ago. “Of the total collected taxes under different headings, the NOC has collected Rs 4.99 billion from consumers as road maintenance charge in a period of five years. Likewise, Rs 2.94 billion has been collected as pollution tax and Rs 13.98 billion as infrastructure development tax, which all went to the government coffer.  

The state-oil monopoly attributed increase in profit to savings in transportation cost by importing fuel from cross country petroleum pipeline – the first one in the South Asia – and also earnings from the interest on the previous year's profit.

Most of the trade and businesses were hit by the corona pandemic as the country came to a standstill for four months, and subsequent prohibitory orders then after for almost one month to follow with restriction on vehicular movements till last month, the NOC pocketed decent profit.

The corporation – technically bankrupt couple of years ago – has started making profit since the fiscal year 2017-18 due to the fall in fuel prices in the international market and also the implementation of automatic pricing system. The corporation claimed that it saved Rs 0.47 billion by pumping diesel through the pipeline, whereas it has earned Rs 1.77 billion from interest in last year's profit from the banks alone.

Encouraged by the first cross border pipeline, and its benefits, the corporation is also planning a second cross border pipeline project. The corporation is also planning to increase in storage capacity in all the seven provinces from the profit. Likewise, the corporation has prepared a balance sheet according to the Nepal Financial Reporting Standards (NFRS) for the first time, the NOC claimed, adding that the corporation has also increased its paid up capital from Rs 290 million to Rs 11 billion in the fiscal year 2018-19.