NOC reluctant to lower petroleum prices

By Laxman Kafle, Kathmandu, Aug. 17: Nepal Oil Corporation (NOC) has again decided not to reduce the prices of fuel.

Although the NOC received the reduced rate of fuel price from India on Tuesday, the corporation has decided to keep the price unchanged citing that it was still facing a loss on fuel sale and has big debt obligations.

“We still have a lot of debt and payment arrears, so we could not adjust the price now,” said Umesh Prasad Thani, managing director of the corporation, by organising a press conference on Tuesday.

He, however, said that the NOC will take decisions in adjusting prices after the improvement in its financial health. 

Thani said that even after receiving the new price rate from the IOC, the corporation is incurring a monthly loss of Rs. 625.8 million. According to him, they still have to pay a due of Rs. 23 billion to the Indian Oil Corporation (IOC).

The corporation claimed that the automatic price system could not be implemented due to the burden of Rs. 33 billion, consisting of Rs. 10 billion loans taken from the government and Rastriya Banijya Bank and Rs. 23 billion to be paid to IOC.

He also claimed that the NOC had faced a loss of Rs. 50 billion in the last fiscal year as it did not adjust fuel price in line with the increment of prices of fuel in the international market.

“The NOC increased the fuel price in the past, we could not strictly follow the auto pricing system which created financial burden to the NOC and became unable to pay the IOC in time. It is not possible to implement the auto pricing system effectively unless petroleum products are sold at the cost price first,” he said.

According to the new price list received from IOC, the corporation has a profit of Rs. 4.74 per litre on petrol while it suffers a loss of Rs. 4.50 per litre on diesel and Rs. 499.57 per cylinder of cooking gas.

The NOC, however, is making a profit from the sale of kerosene and aviation fuel which may help minimise losses.

Currently, the NOC is selling a litre of petrol at Rs. 181, diesel and kerosene each at Rs. 172 and LPG at Rs. 1,800 per cylinder.

Earlier, the NOC had adjusted fuel prices 14 times in eight months from January 2022.

“The declining price of refined petroleum products in the international market has become a help in reducing the NOC’s losses.  The NOC had faced a loss of Rs. 10 billion in the month of July,” he said. He expressed his hope that the price of fuel would decrease in the coming days and it would be easier for the NOC to reduce fuel prices and pay its dues and debt.

The NOC is planning to implement auto pricing system for petroleum products effectively, he said, adding that NOC is still not thinking of implementing an auto pricing system in cooking gas.“We could not implement an auto pricing system in cooking gas as it is still facing a loss of around Rs. 500 per cylinder of cooking gas,” he said.