The government has provided one billion rupees in loan to Nepal Oil Corporation (NOC) to pay to the Indian Oil Corporation (IOC).

The government took the decision as Nepalese banks refused to give loan to state run Oil Corporation to pay two billion and 500 million rupees to IOC in September.

Citing highly placed government sources, Nepal Samacharpatra daily reported that Friday’s cabinet meeting took the decision to this effect amidst speculation that IOC might stop the supply of petroleum products if NOC failed to pay the amount.

The NOC had already paid the amount to IOC along with 260 million rupees it had collected through the sale of petroleum products.

The NOC which makes transaction of over 35 billion rupees a year is said to be in the cumulative loss of eight billion rupees thanks to the variation of the prices in national and international market.