The purchase of oil worth Rs 156 billion has a revenue of Rs 70 billion, Rs 5 billion in freight, and Rs 1.5 billion in administrative expenses.
Loss for the first time since FY 071/72 when the corporation implemented an automatic price system
Consumption of petroleum products has been increasing in the country along with the growth of automobiles and industries. In the last fiscal year 077/78, Nepal Oil Corporation has stated that it has sold petroleum products (petrol, diesel, kerosene, aviation fuel, and gas) worth Rs.
According to Nagendra Sah, acting deputy executive director (finance department) of the Nepal Oil Corporation, a total of 2.856 million kiloliters of fuel was procured last fiscal year. The corporation has paid Rs 156 billion to the Indian Oil Corporation (IOC) for purchasing this amount of fuel. Oil Nimag, which bought fuel at Rs 1.5 trillion, has been at a loss last year even after selling it at Rs 2.5 trillion. "A total of Rs 229 billion worth of oil was sold at a fixed price after adding all costs to the Rs 156 billion worth of oil we bought," he said. It is seen in the statistics. '
Apart from the amount paid for the purchase of oil, the corporation has remitted Rs 70 billion (excluding Rs 27 billion VAT) to the government. Similarly, about Rs 5 billion has been paid for the rent of 1,800 tankers transporting fuel. About Rs 1.5 billion has been spent on administrative and other titles of the corporation. Thus, our total cost comes to Rs 232.50 billion (according to the preliminary audit). However, fuel sales have reached Rs 229 billion, ”said Sah, acting deputy executive director.
This is the first loss incurred by the Nepal Oil Corporation since the implementation of the automatic price system in the fiscal year 2011/12. In the previous fiscal year 076/77, the turnover was Rs. 213 billion. At that time, it had earned a profit of around Rs 13 billion. Similarly, the turnover was Rs. 256 billion in FY 2011/12. At that time, it had earned a profit of about eight billion rupees. The Oil Corporation has been spending the proceeds on the construction of petroleum infrastructure (pipeline expansion, warehouse construction, depot reengineering, etc.).
About 80 percent of the petroleum products entering the country are being consumed in vehicles. The rest is consumed in industrial areas and infrastructure construction projects, according to the Nepal Oil Corporation. Fuel consumption is on the rise due to the increasing use of vehicles and progress in development works. Similarly, as the price of crude oil rises in the international market and the Nepali price weakens against the dollar, the amount to be paid for the purchase of fuel is also increasing. Oil Corporation also sells petroleum in the Nepali market by increasing the purchase price. As a result, the size of the business is increasing.
At a loss due to continuous rise in prices in the international market
Last year, the price of crude oil in the international market continued to rise. According to preliminary data, the corporation incurred a loss of Rs 3.34 billion in the last fiscal year due to its inability to adjust prices according to international market prices. The corporation had accumulated a profit of around Rs 3 billion by increasing the normal price as per the international market price till December last year. At that time, the price of crude oil in the international market was. 42.45 per barrel. At that time, petrol in the Nepali market was 108 rupees and diesel was 91 rupees per liter.
The price of crude oil in the international market was. 40.73 per barrel in July last year. However, exactly one year later (July 2018), the price continued to rise and almost doubled to. 74.76 per barrel. Last July, the corporation had adjusted the price to Rs 128 for petrol and Rs 111 for diesel.
Oil Corporation spokesperson Binit Mani Upadhyaya said that they had to bear the loss last year as they could not adjust the price according to the international market. "Due to pressure from consumers, civil society, and media, we have not been able to adjust the selling price in the Nepali market according to the purchase price. As a result, we were forced to incur losses even when we sold more than two trillion rupees of fuel, ”he said. In March last year, the price of petrol and diesel purchased by the corporation in the same month had gone up to Rs 7-8 per liter. However, there is a rule that the corporation can reduce only up to Rs 2 per liter every 15 days. Upadhyaya said that the company could not be prevented from incurring losses even after increasing the price despite strong protests from consumers and civil society.
