Though governments in the past too had made several attempts to liberalize the country´s messy petroleum sector, their efforts had failed mainly as the lawmakers, particularly from the UCPN (Maoist), strongly rejected the idea of ending state monopoly. [break]
Interestingly, Lekh Raj Bhatta, minister for commerce and supplies from the UCPN (Maoist) said on Thursday that the country cannot bear the cost it was incurring due to wide gap between import and retail rates, lack of reforms in NOC and frequent scarcities.
“There has to be an end to it. And that can happen only if we deregulate prices, open imports to the private sector and cushion the poor through well-targeted subsidy,” said Bhatta. He said the Ministry of Commerce and Supplies has already finalized a draft law to realize these goals.
“We will table it in the House for endorsement in the upcoming session of parliament,” said Bhatta. He did not elaborate on the content of the new bill though.
Talking to the press at the end of a meeting held to review the performances of the ministry over the first nine months of 2011/12, Bhatta also said MoCS was strongly pushing for raising the capital of the debt-ridden NOC.
MoCS officials stressed the urgent need for enhancing NOC´s storage and distribution capacity, streamlining its operations through organizational restructuring and cleaning up its balance sheet. However, they maintained silence on how the ministry plans to achieve these goals.
As in the past, the ministry officials argued the existing taxes imposed on the import of petroleum products were unreasonably high and urged the Ministry of Finance for review.
NOC loss drops to Rs 1.14b
Meanwhile, fresh import rates made public by NOC show that its loss in the month of May will drop to Rs 1.14 billion from Rs 1.55 billion in April.
The decline in loss has been projected mainly as the new supply rate provided by the Indian Oil Corporation (IOC) has enabled NOC to enjoy Rs 3.71 profit on a liter of petrol and Rs 3.02 per liter of kerosene at present retail rates.
The corporation´s profit has increased also on aviation turbine fuel (ATF). It now earns a profit of Rs 14.39 every liter of ATF it sells to domestic flights and Rs 19.73 every liter to international flights.
Despite such profits, NOC´s fund flow is projected to disfigure as its loss on liquefied petroleum gas (LPG) in the new import rate still stands at Rs 598.34 per cylinder (of 14.2 kg). In April, NOC had suffered a loss of Rs 800 per cylinder.
Likewise, the corporation will also suffer a loss of Rs 10.60 on every liter of diesel sold in the market.
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