Pay dues for smooth oil supply : Indian official

Jawed Ashraf, the commerce counselor at the Indian Embassy has said that the Nepal Oil Corporation (NOC) must clear its dues and abide by its agreement with Indian Oil Corporation (IOC) for smooth supplies of fuel.

Addressing a press meet on Tuesday, Ashraf said", "For normal supply, Nepal Oil Corporation (NOC) must adhere to its agreement with IOC -- make full payment for current supplies on schedule and clear outstanding dues at the rate of Rs 240 million per month," he said.

NOC has failed to comply with both the terms since March, subsequent to which the sole supplier of petroleum products to Nepal has curtailed supply at present. This has created a severe crisis of oil in the market.

He, however, stated that the reduction in supplies was not to the extent as claimed by NOC. "The claim of 40 percent reduction is false. The reduction may be at most around 25 percent," said Ashraf.

Moreover, the official said IOC reduced supplies after NOC conveyed it can no longer assure payments for supplies. He elaborated the reduction was done essentially to bring down outstanding dues.

NOC has outstanding dues of Rs 4.85 billion to IOC as at April end 2007.

The Embassy official suggested that the Nepali government not to request conversion of debts into assistance. "It will be inappropriate to use economic assistance program to finance subsidy," said Ashraf.

The statement of Embassy says the latest problem was that NOC has increased its demand enormously, without being in a position to pay for it.

Ashraf also expressed surprise over Nepal constantly maintaining petroleum prices at low rates, whereas prices in India, where taxes on petroleum products and cost of transportation in relatively lower, is higher.

Responding to queries, Ashraf accepted that the rise in demand of NOC could partly be due to outflow of cheaper petroleum products from Nepal to India.

He further stated allegations that IOC is charging NOC a high price as a monopoly supplier, was false.