Oil Corporation Secures First Position in List of Public Institutions Generating Profits

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The Oil Corporation, which had incurred losses for two consecutive fiscal years, has successfully earned profits in the recent fiscal year by capitalizing on the decrease in petroleum prices in Nepal according to the international market. Among the 42 institutions operated under full or partial government investment, only a few have been able to provide dividends to the government by generating profits.

In the fiscal year 2022/23, the Oil Corporation Limited has secured the first position in the list of public institutions generating the highest profits. It is followed by the Electricity Authority in the second position.

According to the Executive Director of the Oil Corporation, Umesh Prasad Thani, the corporation has generated a profit of NPR 18 billion in the previous fiscal year. He also mentioned that all the profits earned have been used to repay loans and clear outstanding dues from the previous fiscal year 2021/22. Thani explained, ‘The Oil Corporation was obligated to maintain profit in the past year, because even though there was a significant increase in prices in the international market, failure to adjust prices in accordance with the Nepali market led to a loss of NPR 48.95 billion for the corporation.’ He further stated, ‘The fact that the profits earned in the past fiscal year were used to offset such losses is something that the informed consumers also recognize.’

The profit earned by the Oil Corporation in the previous fiscal year is the second-largest amount gained in any single financial year until now. Prior to this, in the fiscal year 2015/16, the corporation had earned a profit of NPR 19.36 billion. Even then, a portion of the profit had been utilized for loan repayment.

The corporation has informed that petroleum products worth NPR 81 billion were imported in the previous fiscal year. This represents a 13% decrease compared to the previous year. Due to the stable pricing policy applied to petroleum products, the corporation had generated revenue of NPR 110 billion in the past fiscal year.

Until the fiscal year 2021/22, the corporation had accumulated losses of NPR 17.81 billion. However, the profits earned in the previous fiscal year have not only recovered the accumulated losses but also placed the institution in a state of accumulated profit.

In the list of institutions generating substantial profits in the previous fiscal year, the Oil Corporation holds the second position, following the Electricity Authority. The Authority earned a profit of NPR 12.33 billion. In the previous fiscal year 2021/22, the Authority had earned a profit of NPR 13.37 billion. According to Kulman Ghising, the Managing Director of the Authority, the increase in demand for electricity due to extended hours of power supply, reduction in load shedding, and decreased flow of water in rivers resulting from monsoon delay and reduced water flow have impacted the profit. Ghising stated, ‘The decrease in electricity production from both government-owned and private hydroelectric centers due to extended hours of power supply and reduced water flow in rivers, along with the increase in the quantity of electricity import, has affected the profit margin.

According to him, in the previous fiscal year, the Electricity Authority exported electricity worth NPR 10.35 billion to India, while importing electricity worth NPR 19.45 billion, resulting in a trade deficit. Despite the decrease in the Authority’s profits, there has been progressive success in maintaining control over load shedding and expanding the reach of electricity. The electricity access that was at 89% two years ago has increased to 95% in the past fiscal year, reducing the load shedding hours from 13.46% to 9.76%.

Similar to the Electricity Authority, the Nepal Telecommunications Corporation Limited (Nepal Telecom) also faced a limited profit of NPR 7.80 billion in the previous fiscal year, showing a decline from the profit of NPR 8.47 billion in the previous year 2021/22. The telecom company has indicated that while increased demand for roaming services and positive impacts due to foreign exchange rates contributed positively to the revenue in the past fiscal year, factors such as the increase in cost due to more data usage at lower rates, ongoing disruptions in electricity supply, damages caused by natural disasters to communication infrastructure, changes in telecommunications tariffs due to the Economic Act 2022, increased expenditure in employee benefits, etc., have affected the profit margin in the previous fiscal year.

The Deposit and Loan Protection Fund generated a profit of NPR 3.80 billion in the previous fiscal year. The fund has been operating by working on deposit insurance, particularly from banks and financial institutions, to safeguard against possible losses that could arise from the failure of any bank or financial institution since its establishment by the government in 2011. Since its inception, the fund has consistently been in profit.

Three government-owned banks are also in profit. Comparing the latest earnings of these three banks with the previous fiscal year, there has been an increase in profits. According to initial financial distribution, Rastriya Banijya Bank earned a profit of NPR 4.91 billion, Nepal Bank earned NPR 3.41 billion, and Agriculture Development Bank earned NPR 3.10 billion. Similarly, Citizen Investment Trust earned NPR 90.78 million, and Insurance Company Limited earned NPR 77.35 million in profit.

In the organization, the government is investing 6 billion.

The government had established 62 institutions throughout the country. However, the economic liberalization policy adopted since 1993 gradually pushed these institutions towards continuous privatization. So far, 30 institutions have been privatized, as mentioned in the ‘Public Institutions’ Annual Status Review, 2023 published by the Ministry of Finance. Among the privatized ones, only eight institutions are in profit. Some have closed down, and most are operating at a loss.

The government has invested a total of 60.18 billion in institutions. In fiscal year 021/22, these institutions had provided the government with a profit share of 6 billion 15 crores. Currently, out of the 44 in existence, 42 institutions are operational. Among them, 33 institutions are registered and regulated under the Company Act, while seven institutions operate under Special Act, two under Telecommunication Act, and one each under Cooperative and Institution Acts. Due to varying regulations for each institution, the determination of self-benefit and services differ accordingly. Among those in operation, 21 are in full ownership, and 23 are in partial ownership.

 

Source: Naya patrika