Nepal Oil Corporation (NOC) owes over 150 million U.S. dollars to the banking sector and Indian Oil Corporation (IOC), reported website ekantipur.com Friday.
NOC's financial status has reached an alarming condition due to its growing losses in the last five years, said a report released by the Ministry of Industry, Commerce and Supplies (MoICS) Thursday.
The corporation incurred losses totaling more than 180 million dollars over the last five years, as it sold petroleum products at lower prices than their purchasing prices, said the report.
This is the first time that the ministry has issued a report on NOC's financial status.
Of the total debt, NOC needs to pay more than 92 million dollars to the IOC and nearly 65 million dollars to local financial institutions.
"The NOC has to pay an annual interest of nearly 13 million U.S. dollars for this debt," said Purushottam Ojha, acting secretary at the ministry. The corporation has authorized capital of 7.5 million dollars and paid-up capital of 1.45 million dollars.
According to the report, NOC is incurring monthly losses of nearly 3 million dollars due to lower selling prices of petroleum products. The corporation sells LP gas at a price lower by 3.70 dollars per cylinder. Likewise, it has losses of 75 dollars in every kilo-liter of petrol, 60 dollars in diesel, and 10.5 dollars in kerosene. However, it earns 278 dollars profit in sale of every kilo-liter of aviation fuel.
The report also showed that NOC maintains very low stock of petroleum products, heightening risks of shortage once supply is disrupted. The current stock cannot last for more than three days of demand in the capital. The storage of petrol is sufficient only for a day in Pokhara, the major tourist city some 140 km from Kathmandu.
"If fuel supply is halted for a day, there would be severe repercussions," said Bishwo Nath Goyal, managing director of NOC.
The report said absence of necessary infrastructure like pipeline from Raxaul to Amlekhgunj, the petroleum depot situated at the Indo-Nepal border some 90 km south of Kathmandu, has greatly affected supply of petroleum products.
NOC and IOC have signed an agreement to construct a pipeline, but the project was not initiated due to financial crunch.