Oil Corporation fined 11 million for selling fuel mixed with water

The Supreme Court has ordered Nepal Oil Corporation to pay more than Rs. In the furnace oil supplied for the multifuel power generation plant at Duhvi in ​​Sunsari, water was found several times more than the limit specified in the contract. During the test, the samples taken from different tankers were found to contain 23.72 percent to 26 percent water.

In the agreement between the authority and the corporation, it was stipulated that the water content of the furnace oil to be supplied should be less than three percent. But shortly after starting to use the fuel, the authority conducted a test after seeing unusual problems in the equipment of the plant. Initially, 15.2 and 16 percent water was found in the samples collected by the authority itself. After that, when samples were collected and tested from 10 tankers in Rohbar of the district administration office Morang and representative of Oil Corporation, the amount of water was found to be even higher.

The Electricity Authority had filed a case in the Kathmandu District Court demanding compensation, claiming that equipment was damaged due to poor quality fuel, power production was affected and a large amount of fuel was left unused. The authority demanded compensation for the payment of fuel mixed with water, fuel that could not be used, damage to equipment, repair expenses and loss from electricity that could not be produced. The Kathmandu District Court held that the Oil Corporation did not provide quality fuel as per the contract and ordered the authority to pay Rs 11 crore 21 lakh 18 thousand 886 as compensation.

The Oil Corporation went to the High Court against the decision and the Electricity Authority also appealed saying that it did not get the full compensation as it had demanded. The dispute reached the Supreme Court after the High Court overturned the District Court's decision and ruled that the Authority's claim was not valid. Supreme Court Judge Kumar Regmi and Dr. The joint bench of Manoj Kumar Sharma upheld the decision of the district court. The court ruled that the oil corporation could not provide quality fuel as per the contract and because of that the authority had to suffer financial and technical losses.

The Oil Corporation claimed that it had brought furnace oil from Indian Oil Corporation without storing it and delivered it directly to the authority's plant and that it should not pay compensation as both the organizations are government-owned. However, the Supreme Court explained that even though both organizations are government-owned, they have separate funds, board of directors, income and expense management systems, and have to pay compensation for the damage caused to the other organization due to the mistake of one organization.

The Supreme Court had decided on 11th Baisakh 2080.