IOC to warn Nepal: fuel supply to be cut if dues not cleared

The Indian Oil Corporation has threatened to cut fuel supplies to Nepal by as much as 30 per cent if Kathmandu’s state-run company does not pay an extra Rs 15 crore each month to clear the backlog.

The Indian Oil Corporation has threatened to cut fuel supplies to Nepal by as much as 30 per cent if Kathmandu’s state-run company does not pay an extra Rs 15 crore each month to clear the backlog.

“The outstanding are being closely monitored and in case NOC (Nepal Oil Corp) fails to make payments of a minimum Rs 15 crore every month, a cut of 30 per cent in supplies will be applied,” said an IOC document which comes up for board ratification tomorrow.

The IOC imposed a cut of 20 per cent in supplies in November 2006 which prompted NOC to indicate that it would pay Rs 15 crore over and above the monthly invoice to retire the dues.

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According to IOC, the cut has the sanction of the Ministry of External Affairs. The Indian ambassador to Nepal had written to Nepal’s Finance Secretary while the Foreign Secretary took up the matter ‘strongly’ with the political leadership in Nepal during the former’s November visit, said an IOC official.

Nepal was advised then to deposit a lumpsum payment and also ensure payment of Rs 25 crore to Rs 30 crore each month, he said. “The Indian embassy has been kept advised of the position with a request to take up the issue with the Nepal government.”

The NOC, for the first time, paid Rs 40.79 crore over and above the purchase value in November but its sole fuel supplier IOC was forced to deduct Rs 20 crore from NOC’s December payments towards the owed money.

Last December-end, the NOC owed Rs 339.64 crore to IOC for purchase of 0.75-0.8 million tonnes of petro-products each month. The NOC has not been able to recover the import cost with retail prices kept stagnant by its government.

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