NOC, IOC officials hold talks (12:34 p.m.)

August 11, 2006
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Officials of the state-owned Nepal Oil Corporation (NOC) and Indian Oil Corporation (IOC) are holding talks at the NOC office in Kathmandu on Friday.

A four-member IOC team arrived in the capital for inter-corporation meeting this morning.

According to an official at the NOC, the meeting will finalise payment modules of outstanding dues to the IOC, simplify the payments modules of petroleum products purchased from India and discuss future modalities of purchasing contract.

NOC owes some Rs 6 billion to the IOC.

During the India visit of Prime Minister Girija Prasad Koirala in June, India had agreed to simplify the payment modules. On Thursday, Indian envoy to Nepal, Shiv Shankar Mukherjee, said the issue of payment to be made by the NOC to IOC would be settled very soon.

The NOC has been facing unprecedented losses when the government did not adjust the price of the petroleum products at par with the international market. The price of crude oil in the international market has reached as high as US$78 per barrel.

NOC owes debt of over Rs. 10 billion including payment to the IOC and national private and government banks. The daily losses of the NOC is over Rs. 250 million per day.

The NOC will also propose extending the duration of payment to the last of every month. At present, the NOC has to make payments on the 15th of every month. The NOC is expected to propose for decreasing the interest rate for the dues, which is set at 10.5 percent currently.