NOC barred from distributing bonusThe sub-committee of the parliamentary Industry, Commerce and Consumer Welfare Protection on Wednesday, directed Nepal Oil Corporation (NOC) not to distribute bonuses to the corporation’s employees until the Bonus Act 1973 was amended.
The sub-committee of the parliamentary Industry, Commerce and Consumer Welfare Protection on Wednesday, directed Nepal Oil Corporation (NOC) not to distribute bonuses to the corporation’s employees until the Bonus Act 1973 was amended.
The parliamentary sub-committee also directed NOC to reimburse the money that it had borrowed from the infrastructure development fund while clearing dues of more than Rs36 billion that it owed to the government and a number of financial institutions.
Although the state-owned enterprise had been making a profit for the past two years, it had failed to pay back the money borrowed from the fund. The final straw that broke the camel’s back was when NOC allocated Rs2.36 billion as bonuses to employees during its 35th annual general meeting. This prompted the parliamentary sub-committee to issue the directive not to distribute bonuses and to pay back loans instead.
To pay back the loan that NOC took from the development fund, it has been increasing the prices of fuel by an additional Rs5.
Speaking at the meeting of parliamentary sub-committee, lawmakers said that NOC could not distribute the employees’ bonuses using public money.
Lawmaker Krishna Prasad Poudel criticised NOC for failing to maintain financial transparency. “The state-owned enterprise should consider the welfare of the general people first and has to utilise the money it borrowed from the development fund for a specific task,” Poudel said.
Another lawmaker, Rajya Laxmi Shrestha, blamed NOC for charging excessive prices on petroleum products via different headings. “NOC should consider using the money that it collected for environment protection, price stabilisation and infrastructure construction instead,” said Shrestha adding that NOC should provide employees’ bonuses only after settling liabilities.
The debt ridden NOC had started earning profit since it adopted automatic pricing of petroleum products in September 2015. NOC had already cleared its debt amount by mid-June last year using the profits and the loan borrowed from the development fund.
Currently, NOC has earned cumulative profits totalling Rs1.58 billion. They are estimated to be earning a profit of Rs400 million per month based on the recently revised price list sent by its sole supplier, Indian Oil Corporation. NOC has also declared a dividend payment of Rs145 million to its shareholders.
NOC has been defending itself by claiming a legitimate right to distribute employees’ bonuses out of its annual profit. NOC Managing Director Gopal Bahadur Khadka said the enterprise had planned to distribute the bonuses as per the law. “Had the law barred the enterprise from distributing bonuses even after maintaining cumulative profits, we would not have attempted to do so,” said Khadka.
Nagendra Sah, acting deputy managing director of NOC, said the law allowed the enterprise to distribute bonus of six percent out of its net profit. Giving an example that in the fiscal year 2009-10, NOC did not distribute bonuses as it made a cumulative loss despite securing profits worth Rs3.31 billion, Sah said it was lawful for an enterprise making a profit to distribute bonuses to employees.
According to NOC, it has Rs7 billion in cash reserve while it has already spent Rs2 billion to purchase land to construct petroleum storage plants. Sah said that NOC would be spending a total of Rs10 billion for the construction of fuel storage plants.