6. Expenses Not to be Included:
Notwithstanding anything contained in any other Rule of these Rules, the following expenses shall not be included
in Current Operating Costs or Capital Costs:
(a) Expenses incurred in excess of the following limits:
(1) Expenses of Work performed directly by a Petroleum Industry shall be limited to expenses which are actually
incurred and are not in excess of competitive charges by non- affiliated third parties for the performance of such work.
(2) Overhead expenses incurred in Nepal shall not exceed actual expenses.
(3) Overhead expenses incurred by a Petroleum Industry (and all entities affiliated with Petroleum Industry) shall be limited to the extent that the amounts have been approved annually in advance by Government of Nepal, which amounts shall in no event exceed the following ceilings:
Portion of Annual Expenditure (excluding overhead expenses incurred
outside Nepal) Ceiling on Overhead
Expenses
Up to US$1,000,000
US$1,000,000 to US$ 5,000,000
US$ 5,000,000 to US$ 20,000,000
Over US$ 20,000,000
5%
3%
1%
o.25%
(4) Expenses incurred for goods and services of sub-contractors shall not exceed actual expenses, and shall not exceed competitive charges by non-affiliated third parties for similar goods and services at the time the goods and services are contracted for.
(5) Expenses incurred for acquiring or taking on lease goods, equipment and other materials and construction of facilities, shall not exceed actual expenses and shall not exceed competitive prices, rentals and construction costs for similar goods. Further, such costs shall not include any markup of commission received by the Petroleum Industry or any of its affiliated companies.
(6) Interest, fees and commissions on loans and guarantees shall not exceed competitive rates of interest, fees and
commissions in comparative arms length transactions.
(b) Expenses not directly related to Petroleum Operations in a Contract Area under a Petroleum Agreement.
(c) Income tax or penalties paid in Nepal or any foreign county.
(d) Expenses incurred for the marketing of Petroleum outside Nepal, and costs of transporting, storing, handling and export of Petroleum beyond the point of export in Nepal.
(e) Any expenses which fall within the definition of Petroleum Costs under a Petroleum Agreement but were not reported to Government of Nepal in a statement of Petroleum Costs.
(f) Losses which are recovered through insurance of any contract of indemnity.
(g) Expenditures of a personal nature, gifts and donations.
(h) Expenses incurred before the signing of a Petroleum Agreement.
(i) Foreign exchange losses other that arising from changes in exchange rates between Nepalese currency and Dollars.
(j) Bonuses paid to Government of Nepal.