Fuel dealers seek compensation from NOC

Kathmandu, April 2

Petroleum dealers have sought compensation from Nepal Oil Corporation (NOC) citing that dealers had to bear a loss of almost Rs 400 million following the corporation’s decision to bring down fuel price notably effective from today.

The state-owned fuel supplier has slashed price of petrol and diesel by Rs 10 per litre each while price of aviation turbine fuel (ATF) has been dropped by Rs 15 a litre effective from today amid plummeting price of fuel in the international market. However, dealers have claimed that they had huge volume of fuel in stock which was purchased at higher rates from NOC.

“We have large volume of fuel, which was purchased at a higher price, in stock as there have been no sales due to the ongoing lockdown. As a result, dealers have faced huge loss due to the significant drop in fuel price by NOC,” said Lilendra Pradhan, president of Nepal Petroleum Dealers Association (NPDA).

NPDA today wrote a letter to NOC bringing to light the loss faced by dealers and sought necessary compensation from the corporation. “We are not in a position to bear this loss. Thus, we have sought compensation from the corporation,” added Pradhan.

Pradhan claimed that dealers had kept fuel in stock following the direction of the government to maintain enough stock of petroleum products and ensure effective supply in the market.

With NOC’s decision to reduce price, dealers are obliged to sell petrol and diesel that were purchased at Rs 106 per litre and Rs 95 a litre, respectively, at Rs 96 per litre and Rs 85 a litre, respectively. Moreover, dealers have claimed that all fuel stations will face loss amounting between Rs 80,000 and Rs 800,000 following significant reduction in fuel price by NOC.

Meanwhile, it seems unlikely that NOC will compensate the fuel dealers in this regard. Surendra Poudel, executive director of NOC, questioned the logic behind dealers claiming compensation from the government.

“Fuel price has been revised based on legal mechanism. Dealers who remain quiet when they book profit amid corporation’s decisions to raise fuel prices cannot claim compensation citing they faced loss due to drop in the price. Profit or loss faced by dealers due to revision in fuel price is not the responsibility of NOC,” he said.

As per Poudel, fuel price had been reduced in line with falling oil price in the global market and would provide relief to consumers to some extent.

A version of this article appears in e-paper of the Himalayan Times on April 03, 2020.