State-owned Nepal Oil Corporation has said that the constant rise in the price of crude oil and the value of the greenback had pressured the entity financially to such an extent that it would face difficulty issuing payments to Indian Oil Corporation — the sole supplier of petroleum products to NOC — in the near future if fuel prices were not raised immediately after Chhath festival.
Birendra Goit, spokesperson for NOC, informed that fuel prices had further increased as per the price rate of IOC for Nepal for November, thereby ballooning the corporation’s loss further to more than Rs 1.6 billion in a month. “If prices of fuel are not raised immediately, we will not be in a condition to make payments to IOC,” he mentioned.
NOC issues payments to IOC twice a month — every eighth and 23rd day of the English month. As per Goit, though NOC will clear the first instalment for October 8, it will be unable to release payment for October 23 under the current financial condition of the entity.
In such a context, NOC will have to either seek help from the government or raise the price of fuel. “As we have already adopted automatic fuel pricing mechanism, the only way to sustain NOC is by raising the fuel price immediately after the festive season ends,” said Goit, hinting at a strong hike in the price of petroleum products after Chhath.
NOC has started bearing loss, especially from mid-July this year, along with the rise in global crude oil price. NOC’s financial condition started to deteriorate further in recent months owing to the rise in the price of the US dollar. However, NOC has not raised fuel price since the last few weeks even amid the global surge in the price of petroleum products so as to not add financial pressure on the public during the festive season.
In a bid to sustain fuel price in the festive season, NOC had used almost Rs four billion from the Price Stabilisation Fund of the corporation. Goit informed that the PSF amount with the NOC had already been exhausted.
NOC’s loss has been driven especially by liquefied petroleum gas as it bears a loss of Rs 507 per cylinder. Along with LPG, NOC is incurring loss on petrol and diesel. While the corporation incurs Rs 2.9 per litre loss on petrol, it has been bearing Rs 7.15 per litre loss on diesel.
The Himalayan Times