Govt mulls writing off NOC’s Rs 12.6b loan

KATHMANDU, JUN 16 -
The government is mulling to write off loans of the debt-ridden Nepal Oil Corporation (NOC), Finance Minister Shankar Prasad Koirala disclosed on Saturday stating that his ministry was discussing the agenda.

At present, the NOC’s total outstanding debts to the government and financial institutions stand at around Rs 28.50 billion. It has borrowed Rs 12.64 billion from the government to finance petroleum imports.

Koirala, who also holds the portfolio of the Ministry of Commerce and Supplies (MoCS), said he was positive on the agenda.

According to MoCS officials, a proposal to write off Rs 12.64 billion was sent to the Finance Ministry two weeks ago. If approved, the NOC will be the second public enterprise since last year to enjoy the government privileges. The government had written off Nepal Electricity Authority’s loan worth Rs 27.53 billion in January 2012.

The NOC has been paying Rs 180 million every month in interest accrued on the loans, according to the corporation. The interest burden is directly passed onto the consumers who are compelled to pay an additional Rs 4 on every litre of petroleum products and Rs 56.80 on an LPG cylinder. Nepal imports petroleum products worth Rs 97 billion annually. The import has been increasing by 15-20 percent every year, mainly due to extended load shedding hours.

Meanwhile, Minister Koirala said that the Finance Ministry was also holding discussion on establishing a price stabilisation fund (PSF) aimed at stabilise domestic market prices. The MoCS had proposed earmarking Rs 10 billion for the PSF in the budget for the last fiscal year, but the plan fell through due to the announcement of partial budget. The NOC has demanded the government allocate Rs 50 billion in the upcoming budget.

Labels: National News