Import of diesel continues to surge

Kathmandu, November 28

Rampant outflow of diesel to India has challenged the notion that import of the fuel would drop significantly with the end to load-shedding in the country.

“Diesel import is often higher during dry season every year as industries, sugarcane mills and even farmers consume more diesel to generate energy in backdrop of increased load-shedding hours. However, import has not come down this year despite significant reduction in load-shedding due to huge outflow of diesel from Nepal to India via border areas,” a confidential source at Nepal Oil Corporation (NOC) told The Himalayan Times.

The selling price of diesel and petrol in Nepal is cheaper by almost Rs 18 per litre and 12 per litre, respectively compared to its price in India. Due to this, a large number of Indian people, traders and black marketers come to Nepal to buy fuel. As per the price list of Indian Oil Corporation, diesel was available at INR 58.22 per litre in Bihar, which is equivalent to Rs 93. However, the fuel costs only Rs 75 per litre in Nepal.

Sources said that almost 500 to 600 kilolitres of diesel is transported across the border to the Indian side every day.

The reason for the price mismatch is because the Indian government has been imposing high taxes on petroleum products, making diesel and petrol dearer. However, Indian government does not impose local taxes on petroleum products supplied to Nepal.

According to the statistics of NOC, Nepal imported 318,570 kilolitre of diesel within the first four months this year (mid-July to mid-November) against 238,214 kilolitres in the same period of 2014-15. Diesel import in the first four months of 2015-16, however, had plummeted due to months-long supply disturbance at Nepal-India border.

At a recent programme held in the Capital, Pashupati Murarka, president of Federation of Nepalese Chambers of Commerce and Industry, had claimed Rs 14 billion to Rs 16 billion had already been saved after the Nepal Electricity Authority had not imposed power cuts since last few months.

However, the diesel import data of first four month of this fiscal show 33 per cent rise against the import figure of the same period in 2014-15 and 111 per cent surge as compared to last year’s corresponding period.

NOC’s data shows diesel import in the fourth month of this fiscal (mid-October to mid-November) has gone up by 15,711 kilolitres when compared to first month of the current fiscal year (mid-July to mid-August).

Consumption of petroleum products in Nepal is increasing by almost 12 per cent every year following energy scarcity and increasing number of vehicles. However, the current surge in import of diesel and petrol is more due to their outflow to Indian markets, NOC officials said.

They say the current outflow of petroleum products from Nepal to Indian market cannot be controlled unless prices of petroleum products are hiked in Nepal. While such a move would affect Nepali consumers, ‘the only immediate solution to this problem would be to ramp up the monitoring in the border areas’, said the NOC officials.