Caught in a pincer of a freefalling rupee and rising crude prices, Nepal Oil Corporation ( NOC ) has asked its line ministry for a Rs 4 billion loan to finance petroleum imports. The debt-ridden, state-owned oil monopoly said it had asked the Ministry of Commerce and Supplies (MoCS) to arrange the said amount as fears loom of possible petroleum shortages with the onset of the festival season and the announced Constituent Assembly election on Nov 19. The city of Kathmandu sees a mass exodus of people to their home towns during the Dashain festival with hundreds of vehicles leaving the valley each day. NOC estimates that diesel consumption, on which NOC is incurring a monthly loss of Rs 674.8 million, during Dashain jumps around 20 percent. Officials added that the election campaign could also be a contributing factor for higher demand of fuel starting September. “We have discussed the NOC ’s proposal with the Finance Ministry, and the latter has assured arranging credit within a few days,” said Deepak Subedi, spokesperson of the MoCS. “The proposed credit is expected to ease NOC ’s pressure till at least Dec 30.” Brent crude oil hit a six-month high amid worries of a possible military strike by the Western powers against Syria that could hit Middle Eastern crude supply, according to media reports. “Brent had jumped to a six-month high of US$ 117.23 a barrel on Wednesday,” Reuters reported. The depreciating Nepali rupee set another record against the US dollar when it slipped to an all-time low of Rs 105.31 on Tuesday. The US dollar has become expensive by more than Rs 10 in a month’s time, resulting in imported goods becoming expensive. NOC said that its monthly projected loss is expected to go up to Rs 1.50 billion from the current Rs 1.06 billion. Last month, NOC suffered a Rs 800 million loss as it has been subsidizing Rs 523.73 per LPG cylinder and Rs 9.92 on a litre of diesel. NOC officials said that they had not observed much pressure on fuel supply but things are going to be difficult from the beginning of September, when its sole supplier Indian Oil Corporation (IOC) sends the new petroleum tariff. IOC reviews the export prices of petrol and diesel fortnightly and of other products such as kerosene, aviation fuel and LPG on a monthly basis. NOC ’s total outstanding debts to the government and financial institutions stand at around Rs 28.50 billion. The government has been bailing out NOC frequently when the market suffers an acute shortage of petroleum products. As usual, petroleum continued to be the number one import item. In 2012-13, Nepal imported petroleum products worth Rs 107 billion, up 16.1 percent from the previous year.
Posted on: Fri, 30 Aug 2013 03:24:26 +0000
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