Indian Oil Corporation (IOC) is resuming the supply of petroleum products to Nepal following a Rs 60-crore payment by Nepal Oil Corporation (NOC) on Thursday. The Himalayan kingdom had stocks left for 48 hours after IOC cut fuel supplies due to less-payment by NOC.

“A short term arrangement has been made to supply up to 3,000 kilolitres per day for a few days to tide over the fuel crisis,” said sources. IOC usually supplies 50,000 to 70,000 kilolitres a month to NOC.

NOC, which enjoys a monopoly in the import and distribution of fuel, owed IOC Rs 287 crores as of March 31, 2007, and had promised to pay this amount in equal installments of Rs 15 crore per month. As for the current year’s bills, it had agreed to pay the entire sum in the following month.

However, in the first month itself, NOC could not pay Rs 15 crore of the outstanding. It also paid Rs 15 crore less on the April bill. “The outstanding has now climbed to Rs 302 crores,” said an IOC spokesman. IOC was, therefore, forced to stop supplies, he said. Under a new agreement signed in March, NOC is free to buy products from any third country it deems fit. The five-year agreement allows NOC a soft payment option for its purchase with four equal installments in a month. Most petrol stations ran dry, prompting Nepal’s industry, commerce and supplies minister Rajendra Mahato to meet Indian ambassador to Nepal Shiv Shankar Mukherjee on Thursday and urge the Indian envoy to help. He promised to sort out the payment issue and asked for more time.

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