NOC was recently forced to get back to the Nepal Government for settling the September import bill of Rs 120 crore. While the Government stood by NOC this time, too, by way of extending loan, IOC has already sent indicative bills for the next month, which are even higher.

Pratim Ranjan Bose

Kolkata, Oct. 30

DESPITE a worsening financial condition, the cash-strapped Nepal Oil Corporation (NOC) has again escaped becoming a defaulter on its payments to IOC, its sole supplier of refined petroleum products, owing to last minute loan assistance from the Nepal Government. This is also keeping IOC on its toes.

"We are on a long standing agreement with NOC for supply of petroleum products. Accordingly, there is no question of stopping the supplies at any point of time. However, there is no denying that the worsening financial health of NOC is a cause of concern," a senior IOC official told Business Line.

At present, the state-run NOC is losing over Rs 55 crore per month (owing to the dual effect spiralling oil prices and non-revision of prices at home), and is surviving only on loan finances, and that too, only from the Government.

According to the agreement, IOC makes supplies of 0.75 to 0.8 million tonnes (mt) of refined products on month-to-month basis.

Though there is no major default so far, the ailing NOC could settle the Rs 100-crore outstanding on supplies, in August, in three tranches only after the Government came to its rescue.

NOC was recently forced to get back to the Nepal Government for settling the September import bill of Rs 120 crore. While the Government stood by NOC this time, too, by way of extending loan, IOC has already sent indicative bills for the next month, which are even higher.

According to the IOC official, "We had a problem regarding payments from NOC a few months back, when the Union Ministry of Petroleum and Natural Gas and the Ministry of External Affairs came to our rescue. We are now asked to keep the External Affairs Ministry posted on the developments regarding NOC."

Meanwhile, implementation of the proposed Raxaul-Amalekhganj pipeline to deliver products in Nepal is yet to begin.

According to sources, Indian Oil is in the process of completing the feasibility study of the project.

The company's proposals for setting up a joint venture company with NOC for marketing of petroleum products and LPG bottling plant are yet to take shape.

(This article was published in the Business Line print edition dated October 31, 2005)
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