Print Edition - 2017-04-17 | MONEY
NOC to issue public shares to raise capital
Apr 17, 2017-
Nepal Oil Corporation (NOC) has planned to issue shares to the general public in the next fiscal year in a bid to increase its capital base. The state-owned oil monopoly has aimed to boost its paid-up capital to Rs20 billion from the existing Rs290 million.
According to NOC, the planned increase in capital follows a rise in business. The public enterprise plans to build gasoline storage plants in the seven provinces and has already invited tenders from potential contractors.
“It has become necessary to increase the capital base in accordance with our expansion scheme,” said Nagendra Sah, acting deputy managing director of NOC. Sah added that NOC would also raise its authorised capital and issued capital to Rs30 billion each. According to him, the enterprise has received the go-ahead from the Office of the Company Registrar to expand its capital base.
As per NOC’s plan, 30 percent of the shares will be set aside for the general public. Out of this, 5 percent will be reserved for NOC employees. Similarly, 55 percent of the shares will be allocated to the government and the remaining 15 percent has been set aside for a potential strategic partner.
Until a few months ago, NOC had a paid-up capital of just Rs90 million. Recently, the Finance Ministry agreed to capitalise the Asian Development Bank’s Rs200 million grant to build storage tanks at its depots in Thankot, Amlekhgunj, Pokhara and Tribhuvan International Airport.
Government bodies including the Supply and Finance ministries and the Department of Supply Management hold 99 percent of NOC’s shares. The remaining 1 percent is owned by National Trading, Rastriya Beema Company, Nepal Bank Limited and Rastriya Banijya Bank.
Sah said the NOC aimed to collect Rs11 billion from its undistributed profits, rights shares and bonus shares. At present, NOC has reserve fund of Rs7 billion that the enterprise has gathered from its profit.
After NOC adopted an automated pricing policy in September 2014, it has been earning profits almost every month until last December. After running up losses for almost five months, the enterprise has projected a profit of Rs120 million for April.
Sah said they were holding talks with the Finance Ministry to increase capital. “If the government agrees to capitalise its annual dividends from NOC, we will not need to ask for extra grants from the government to raise the capital base,” he said.
Published: 17-04-2017 08:00