KATHMANDU: Nepal Oil Corporation ( NOC ) has announced a dramatic turnaround posting a profit of Rs18 billion for this fiscal year after five straight years of losses. However, the company still owes Rs21.88 billion to various creditors.
A sharp drop in sales losses of liquefied petroleum gas (LPG) has helped NOC to earn a profit . After the corporation adopted an automated pricing system in the petroleum business, except LPG, its ballooning losses began to drop.
The last time NOC made a profit was in 2008-09. In August 2010, the company’s decision to distribute Rs198.8 million in bonuses to its employees from its profit of Rs3.31 billion for the fiscal year 2008-09 was struck down by the Commission for the Investigation of Abuse of Authority (CIAA) citing the Bonus Act which does not allow the distribution of bonuses by institutions that have huge debts and are facing a massive cumulative loss.
NOC Managing Director Gopal Bahadur Khadka said the government-owned undertaking was able to post the gain mainly due to a fall in liabilities in LPG. “The loss on a cylinder of LPG has fallen to only Rs17.28 which used to be more than Rs1,000 in the past.”
Since Sept 29, 2014, NOC has been implementing the auto pricing system on petrol, diesel and aviation fuel. However, it still subsidises LPG to the tune of Rs17.28 per cylinder. Currently, a cylinder of LPG costs Rs1,470 retail.
The latest profit s have allowed NOC to repay loans and interest amounting to Rs14.98 billion mainly to the Citizen Investment Trust and Employee Provident Fund. According to NOC , it paid the two institutions Rs6.38 billion and Rs8.60 billion respectively. The interest payments totalled Rs2.88 billion.
The corporation is still saddled with loans amounting to Rs21.88 billion, including debts totalling Rs12.64 billion to the government. According to Khadka, they have asked the government to turn the debts into fixed capital.
NOC said its projected profit presently is Rs1.22 billion per month. Based on the current profit scenario, the oil monopoly is likely to clear its entire loans in the next eight to nine months.
