The Nepal Oil Corporation (NOC) Thursday paid Rs 1 billion to Indian Oil Corporation (IOC), following which the Indian supplier said it would resume normal supplies immediately.The state-run petroleum supply monopolist, NOC made the payment to the sole supplier of fuel after the Ministry of Finance (MoF) released the said amount on Thursday.
Ichha Bikram Thapa, spokesperson of NOC, confirmed that the corporation on Thursday cleared IOC dues for the months of April and May and made advance payment of Rs 240 million each for June and July, as per the bilateral agreement of paying additional Rs 240 million each month to settle the previous outstanding.
According to Thapa, NOC on Thursday deposited the amount at the IOC's account with the Standard Chartered Bank. "With this payment, petroleum supply is expected to become normal to some extent," he said. He, however, said that this is not a permanent solution, as NOC is still incurring a loss of over Rs 254.8 million every month.
Last week NOC had also disclosed that IOC has tightened the supply of petroleum products following its failure to clear the outstanding dues as well as monthly import bills for the last two months. Earlier, NOC had committed to paying an additional Rs 240 million every month along with monthly import bills to settle past dues.
As of mid-May, the NOC's total liabilities have crossed Rs 10 billion, the largest chunk being with IOC which accounts for Rs 5.955 billion and Rs 4.44 billion for domestic financial institutions.
Last week, the corporation also stated that the government is now left with two options, either to provide Rs 500 million support to NOC to ensure regular supply or immediately adjust petroleum prices.
According to figures provided by NOC, the corporation is incurring monthly losses of Rs 55.7 million on petrol, Rs 120.5 million on diesel, Rs 144.3 million on LP Gas and Rs 47 million on kerosene. The only profit making product is air turbine fuel (ATF) that stands at Rs 112.8 million a month.
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