Print Edition - 2016-10-20 | MONEY
Groundwork starts for merger of NTL, NOC
Oct 20, 2016-
The government has started laying the groundwork for the merger of National Trading Limited (NTL) and Nepal Oil Corporation (NOC) in a bid to strengthen the capital base of the state-owned oil monopoly, according to Supplies Minister Deepak Bohara.
The proposed amalgamation follows the government’s plan to combine loss-making public enterprises having a large amount of fixed assets. “We have already asked for the Finance Ministry’s opinion in this regard,” the minister told the Post.
Currently, NTL has outstanding dues totalling Rs920 million. The public enterprise, which is engaged in the business of selling daily essentials, household equipment and other logistic items, is facing financial problems due to a lethal combination of low income and high overheads.
NTL’s average annual revenue stands at Rs50 million while its administrative costs amount to around Rs100 million, according to the ministry. The enterprise’s financial position started weakening after the Maoist-led government in 2008 closed the duty-free shop it was operating at Tribhuvan International Airport.
In a bid to give NTL a new lease of life, the government had said in this year’s budget statement that it would be merged with Nepal Food Corporation, Agriculture Inputs Company and Timber Corporation of Nepal to form National Supply Company.
“There has been a slight change in the plan, and we are now planning to merge NTL and NOC,” said Bohara, adding that NTL would be allowed to carry on its previous businesses.
The government has planned to offer a voluntary retirement scheme to 265 of the 290 employees at NTL to reduce the financial burden. The corporation also holds a 0.76 percent share in NOC, which has a paid-up capital of Rs96.7 million. Other shareholders of NOC are the Supplies Ministry (61.44 percent), Finance Ministry (19 percent) and Department of Supply Management (18.8 percent).
Earlier, there was talk that the government would be converting NTL into a subsidiary of NOC. The idea was to create a separate body to import petroleum products from China, a Supply Ministry source said.
“As NOC cannot import petroleum products from any other entity except Indian Oil Corporation, the ministry had planned to make NTL a subsidiary of NOC to import fuel from the northern neighbour,” the ministry source said. This proposal coincided with the government’s plan to build petroleum storage plants in Rasuwagadhi and Panchkhal which are close to the Nepal-China border.
China has agreed to provide petroleum products to Nepal, and dispatched the first shipment of 1,300 kilolitres of petrol last November when it was reeling from a fuel crisis after India cut off supplies during the four-and-a-half-month trade embargo.
Published: 20-10-2016 08:28