IOC threatens Nepal of cutting fuel supply

The Indian Oil Corporation (IOC) has threatened to cut fuel supplies to Nepal by as much as 30 per cent if Nepal Oil Corporation (NOC) fails to pay an extra Rs. 150 million each month to clear the backlog, a report said.

Citing the document to be submitted to the IOC board, Indian newspaper Indian Express on Monday stated “The outstanding are being closely monitored and in case NOC (Nepal Oil Corp) fails to make payments of a minimum Rs. 150 million every month, a cut of 30 per cent in supplies will be applied”

The IOC imposed a cut of 20 per cent in supplies in November 2006 which prompted NOC to indicate that it would pay Rs. 15o million over and above the monthly invoice to retire the dues, the reports stated.

The report quoted an official at IOC as saying that said the cut has the sanction of the Ministry of External Affairs and the Indian ambassador to Nepal had written to Nepal’s Finance Secretary while the Foreign Secretary took up the matter ‘strongly’ with the political leadership in Nepal during the former’s November visit.

The report further said Nepal was advised then to deposit a lumpsum payment and also ensure payment of Rs. 25o million to Rs. 30o million each month. “The Indian embassy has been kept advised of the position with a request to take up the issue with the Nepal government” the report quoted the official.

The NOC, for the first time, paid Rs. 408 million over and above the purchase value in November but its sole fuel supplier IOC was forced to deduct Rs. 200 million from NOC’s December payments towards the owed money.

Last December-end, the NOC owed Rs 3.39 billion to IOC for purchase of 0.75-0.8 million tonnes of petro-products each month. The NOC has not been able to recover the import cost with retail prices kept stagnant by its government. The cuts were approved by India's foreign ministry, the report said.

Nepal Oil sells oil products at a loss at prices fixed by the government and so is unable to recover its import costs. The NOC has not been able to recover the import cost with retail prices kept stagnant by its government, the report said.

IOC threatens Nepal of cutting fuel supply

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