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Price hike fuels inflation fears
Added At: 2011-07-11 12:10 AM
Last Updated At: 2011-07-11 12:10 AM
HIMALAYAN NEWS SERVICE
KATHMANDU: The state oil monopoly has hiked the price of diesel and kerosene by Rs 5 per litre, effective from today, stoking fears of inflation. They will now cost Rs 73.50 per litre.
“The price hike will fuel inflation as costs of commuting and goods go up apart from production cost of domestic industries,” senior economist Dr Bhishwambhar Pyakurel said, adding that the hike will add to burden on household budgets, already stretched to limit by soaring prices of essential foodstuff.
According to him, the country seems to be falling into an inflation trap. “Consumers will be forced to face added burden, including hike in public transport charges and imported commodities,” he said, adding that the decision will escalate inflation that is hovering around 10 per cent.
“Domestic industries will suffer as they have been using diesel due to regular power outage,” he informed. “Their cost of production will go up and the market price will also witness upward movement,” he added. “Though it is not possible to project exact rate of inflation at present since the domestic market is not regulated. It will start to show its effects after a couple of months,” he added.
However, Nepal Oil Corporation said the decision was inevitable since its losses were piling up. The decision was taken to make up for the loss incurred by the state oil monopoly, NOC spokesperson Mukunda Prasad Dhungel said. With the increase in price, NOC’s monthly loss will come down from Rs 1.4 billion to Rs 740 million, according to Indian Oil Corporation’s July 1 price list, Dhungel said.
Even after the hike, the state oil monopoly will incur Rs 9.16 loss on a litre of diesel and Rs 0.96 loss on kerosene, according to the corporation. However, there is no change in the price of petrol and ATF. The price of petrol stands at Rs 102 per litre and ATF costs Rs 100 per litre.
The corporation makes a profit of Rs 4.49 on a litre of petrol and Rs 20.86 on
ATF. However, it is incurring Rs 343.53 loss on a cylinder of cooking gas which
costs Rs 1,325. Following massive adulteration of diesel and kerosene, the state oil monopoly had decided to adjust the price in November 2008.
History
Date Price
March 14, 2010 Rs 61
April 22, 2010 Rs 63
July 6, 2010 Rs 65.50
December 6, 2010 Rs 68.50
July 10, 2011 Rs 73.50
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