'NOC is bankrupt'
The unregulated oil politics seems to have pushed the state-owned Nepal Oil Corporation (NOC) to bankruptcy.
Former vice chairman of National Planning Commission (NPC) Dr Shankar Prasad Sharma says the present status of the NOC is of bankruptcy. “What remains now is the government’s announcement to declare it a bankrupt corporation,” he told Nepalnews Monday.
Following furious street protests nationwide, the government revoked its decision to increase the price of petroleum products after two days on Sunday. Industry, Commerce and Supplies minister Hridayesh Tripathi had said the price hike was necessary to downsize the huge losses the corporation has been incurring since years.
While announcing the price hike, the minister had said the government had no other option to bail out the NOC. Earlier, both Tirpathi and finance minister Dr Ram Sharan Mahat had been saying publicly that there would not be any increase in the fuel prices.
Dr Sharma maintains that the government failed to do proper homework before announcing price hike in petroleum products. Few years back, a commission led by Sharma had suggested for thorough investigation into technical and administrative lapses at the NOC that have also been causing mammoth losses.
Chief whip of the CPN (UML), Mahendra Pandey, who tabled the proposal to revoke the POL price at the House of Representatives on Sunday, told Nepalnews that if the NOC has fallen flat, it was something which would be decided only after the three-member committee formed by the cabinet on Sunday, submitted its report.
“We have no objection to raising the prices, but before that, the government should check the corruption within the corporation, leakages of the oil, decrease the taxes and take initiative to ask the Indian government to revoke some taxes imposed on oil transported to Nepal,” said Pandey, questioning, “Why do the state corporations in Nepal go into liquidation while their managers become plump financially?”
The UML MP says the profit margin given to the dealers is too high. In the wake of protests against the price hike, minister Tripathi had said the government would reduce the commission given to dealers. The dealers get 3 percent commission in the sale of petroleum products while it is 35 paisa per liter in India.
Experts say the decision of the government is immature and untimely and that it was unable to justify the reasons to increase the oil prices. In what signaled the lack of preparedness on the part of the government, supplies minister Tripathi failed to appear before the parliament's human rights committee on Sunday to explain the rationale of price hike.
The warning of a visiting team of the Indian Oil Corporation (IOC), the sole supplier of oil to the NOC, last week is said to have influenced the decision to hike fuel prices. Tripathi on Sunday evening also hinted that IOC might stop the supply of petroleum products to Nepal in view of the growing liability of the NOC. The NOC owes more than Rs 8 billion to IOC and around Rs 4 billion to various financial institutions in the country.
Dr Sharma proposes one solution: increase the private sector involvement in the supply of petroleum products, take initiatives for buying crude oil and refine it in India and extend the oil pipeline from India to Nepal.
With over Rs. 12 billion debt, which is mounting by the day, the NOC’s total fall is likely if no proactive measures are taken on time. nepalnews.com Indra Adhikari Aug 21 06
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