The state-owned Nepal Oil Corporation (NOC) – that enjoys monopoly in the procurement of petroleum (POL) products in the country—has said it failed to get positive response from the leading commercial banks in the country in response to call for a short-term loan of Rs two billion.

Talking to Nepalnews on Tuesday, spokesperson of the NOC, Sushil Bhattarai, said no commercial bank took part in the bid to offer loan the NOC. “Now, we are approaching them individually for the loans,” he said.

Bhattarai said the commercial banks may have become reluctant to offer loan to the NOC after they started publicizing their monthly losses.

“We receive sympathy from the public for our losses. But we don’t get support from any sector to pay back the debt we owe to the Indian Oil Corporation (IOC),” Bhattarai lamented.

NOC now owes more than Rs three billion to the IOC, according to officials.

When contacted by Nepalnews early this month, leading bankers said they did not want to provide such a large amount of loan to the Corporation that was well known for weak financial position. “We don’t hope the Corporation will be able to pay back us in time,” they said.

According to NOC officials, the monthly loss incurred by the corporation was running at well over Rs 570 million until few months back. The NOC continues to incur losses of about Rs two million every month despite the government raising prices of POL products five times over the last 15 months, according to reports. NOC officials said this will not be adjusted until the price of LP Gas is increased.

Bhattarai, too, admitted that the NOC was not in a position to clear its debt without support from the government. The government had earlier provided a loan of over Rs 2.5 billion to the NOC to repay its debts. The authorities also instructed the NOC to manage its financial matters on its own.

On March 8 this year, the corporation published a public notice in the state-owned Gorkhapatra daily calling upon the commercial banks to make a bid within four days if they were willing to offer a short-term loan of Rs two billion. It said it would pay back Rs one billion within three months and the rest within the next three months.

Owing to continuous demand for hike in POL products by the NOC and under pressure from donor agencies including the World Bank and IMF, the government gave the nod to raise the price of petroleum products last month as soon as the municipal polls were over. Meanwhile, the NOC has allowed the private sector to fix retail rates of POL products from gas stations.

Analysts say deregulation of the oil sector as well as promoting healthy competition in the petroleum business would go a long way towards easing burden off the consumers as well as the state-owned NOC.

For the time being, the only worry of the NOC officials is how to pay back the debt of the IOC in time.