The revised supply rates that the IOC issued to Nepal Oil Corporation (NOC) on the day has widened the latter´s loss on diesel, which makes up 50 percent of total petroleum trade, by more than Rs 4 per liter. “Our loss on diesel has now jumped to Rs 18.91 per liter,” said NOC spokesman Mukunda Dhungel.[break]
Loss on LPG, whose weightage in the total petroleum trade is around 25 percent, too has jumped to Rs 339.22 per cylinder (of 14.2 kgs) from Rs 288.66. Loss on a liter of kerosene has also jumped by over Rs 5 to Rs 7.12.
The new rates have widened NOC´s profit margin on petrol by over a rupee to Rs 2.77 per liter, but it has shrunk the profit that NOC was enjoying on aviation fuel by Rs 5 per liter to Rs 12.85 per liter.
As a result of these changes, NOC expects a profit of Rs 176.60 million from petrol and ATF in December, whereas loss from diesel, kerosene and LPG is estimated to be Rs 1.44 billion.
“This is too huge a loss for NOC to manage, particularly given that we have already been relying on bank finances to maintain regular import,” added Dhungel.
Even though the corporation has consistently been pushing the government for permission to raise prices of diesel and LPG -- the two major loss-making products, it has failed to garner positive response. As a result, the debt-ridden state-owned petroleum monopoly reported a loss of Rs 993.50 million for November.
If the government continues to turn a deaf ear to NOC´s call for price adjustment of major loss-making products, officials fear that it might simply fail to maintain supplies in the months ahead.
The corporation had managed imports and maintained supplies so far by taking loans from commercial banks. “This has already increased our outstanding loans to Rs 18.62 billion. We doubt we will be able to get more loans,” said Dhungel.
Given the situation, the corporation officials say there are only two options for it to maintain normal supply: either the government should raise domestic prices or it should arrange loans for NOC.
“Raising petroleum prices will obviously be an unpopular decision, but it is the only sustainable way out this mess. If the government chooses the easier way of issuing loans to NOC, it will leave our problem as it is for the next month,” reasoned Dhungel.
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