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

Addressing a press meet on Tuesday, Ashraf said that NOC should make full payment of current supplies on schedule and liquidate outstanding dues at the rate of Rs 240 million per month.

He said that since this is a commercial issue between two state-run entities, the problem must be solved on commercial basis.

Ashraf rejected reports that IOC has reduced supplies of fuel by 40 percent. He said the reduction may at most be around 25 percent. “The problem is that NOC has been increasing its demand enormously without being in a position to pay for it,” he said.

Ashraf pointed out that price of petroleum products in Nepal was lower than in India despite the higher duty and transportation cost in Nepal.

He added that although IOC had no contractual obligation, it had been supplying fuel to NOC as a goodwill gesture even in the absence of payment. The NOC’s outstanding dues to IOC have crossed Rs 4.85 billion.