The parliamentary Finance Committee on Tuesday formed a sub-committee to probe a land deal by Nepal Oil Corporation (NOC) for possible fraud.

The state-owned enterprise has been put under the scanner for alleged misappropriation of funds amounting to Rs670 million while buying land worth Rs1.61 billion in four places: Bhairahawa, Chitwan, Sarlahi and Jhapa. 

NOC had moved to buy land to build storage facilities in all seven provinces following government instructions to maintain a 90-day stock of fuel.

The corporation issued a tender call and bought 24 bighas of land each in Chitwan and Jhapa districts. Similarly, the enterprise bought 20 bighas each in Bhairahawa and Sarlahi districts. NOC has been accused of overvaluation of the land. It has been charged with misappropriation of funds totalling Rs440 million on purchase of land in Chitwan and Jhapa districts. Similarly, it has been charged with misappropriating Rs150 million and Rs80 million respectively on purchase of land in Bhairahawa and Sarlahi districts. 

Speaking at the parliamentary committee meeting, lawmaker Abdul Razzak said NOC was found to have paid 90 percent more than the going rate when buying land in Bhairahawa. “NOC has paid an exorbitant amount of money for land inundated by the Rohini River,” Razzak said.  

According to Razzak, NOC has paid up to Rs600,000 per kattha of land while the market rate is Rs80,000 to Rs90,000. “NOC has spent a total of Rs314 million in Bhairahawa alone against the actual cost of Rs172 million to buy 20 bighas of land.” Similarly, the state-owned enterprise has paid more than Rs200 million for 20 bighas of land in Lalbandi, Sarlahi. Based on the market rate of Rs300,000 per kattha, the land should have cost only Rs120 million. 

Earlier, the parliamentary Industry, Commerce and Consumer Welfare Committee had asked NOC to look for state-owned land as far as possible for the purpose of constructing the storage plants. 

NOC said that it had followed the government rule of calling for tenders to buy land. Supplies Secretary Prem Kumar Rai, who is also the chairman of the NOC board, said the ministry had delegated full authority to the corporation to buy the required land. 

NOC Managing Director Gopal Bahadur Khadka said they had followed government regulations regarding procurement strictly. Khadka added that there may have been misappropriation of funds at the implementation level. 

Lawmakers and consumer rights activists have charged NOC of violating the norms of the Land Acquisition Act and the Public Procurement Act. “Instead of following the provisions in the acts while buying property, NOC has enforced its own bylaws with the ill intention of embezzling public funds,” said Jyoti Baniya, president of the Consumers’ Welfare Protection Forum.