“We have already initiated the process for issuing fresh loans to the cash-strapped state-owned petroleum import monopolist,” said a source at Ministry of Finance (MoF). [break]
MoF a week ago had officially written to the NOC that it was not pledging further loans to it and suggested it to go for price hike. But it was forced to rollback the decision as the government ruled out price hike, mainly fearing criticism of general consumers, student unions and political parties.
“Reluctance to price hike at a time when import has dropped affecting, meanwhile, gave us no option but to issue loans to NOC yet again,” said the source.
Referring to the latest import rates, which threatened to jack up NOC´s loss to Rs 1.26 billion in December, the corporation had pushed the government to either adjust the retail rates in line with the international trend or provide it loans to finance import.
As the government did not give prompt decision, NOC of late had cut imports volume by 40 percent. It had mainly cut the imports of diesel in which it is suffering a loss of Rs 18.91 per liter. This had sparked a shortage of industrial fuel in the market.
Records show, NOC was selling just 2,000 KL of diesel in the market every day, whereas the normal demand was 3,000 KL.
Given the situation, NOC had tried to take loans from private banks as well. However, they cold-shouldered its request mainly as the corporation is already reeling under huge debt of over Rs 18.62 billion.
NOC officials have welcomed the decision to issue fresh loans. However, they said it was not a sustainable solution. “It will address the problem for now. But what will the government do next month when we will have the loans amount burnt yet again?” questioned a senior NOC official.
Referring to the huge import-retail price gap, NOC has been consistently pushing the government to raise prices of diesel and LPG -- the two major loss-making products.
“We always suggested that the government hike prices by a few rupees so that people may not feel its burden. But the government pushed the issue on the back burner. Thanks to the government´s reluctance, today we are suffering loss of Rs 18.91 on a liter of diesel and Rs 7.12 on a liter of kerosene,” said the NOC official.
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