Kathmandu, July 19
Nepal Oil Corporation (NOC) has decided not to revise the fuel price for the fortnight, even though it will be able to buy fuel from Indian Oil Corporation (IOC) at a cheaper rate.
Based on the IOC price list for July 15 to 30, which was received by NOC yesterday, the state-owned entity will now generate profit worth seven rupees on sale of each litre of petrol and Rs 1.50 on diesel. This will increase NOC’s fortnightly profit from around Rs 350 million to above Rs 400 million.
Earlier, NOC had been passing on its loan and interest liability to the consumers. As NOC has cleared its entire loan burden last fiscal, which ended on July 15, and since the fuel purchase price has also dropped, consumers were expecting adjustment in fuel price accordingly.
However, NOC Managing Director Gopal Bahadur Khadka said that the corporation may not revise the fuel prices this fortnight because the price at which it purchases fuel from IOC has dropped only nominally.
NOC had also introduced automatic pricing mechanism to adjust fuel price every fortnight based on the international market rates. The automatic pricing mechanism allows reduction or jacking up the price by up to two per cent, depending on the international market trends. NOC receives fuel purchase rate every fortnight from IOC.
However, the NOC’s automatic pricing mechanism has remained defunct since long.
NOC, taking advantage of rampant fall of oil price in the international market, has cleared its entire loan burden worth Rs 36.86 billion over the last two fiscal years.
NOC has said that the retail price of diesel and petrol is cheaper by Rs 20 and Rs 11, respectively, when compared to the bordering towns of India and argued the possibility of smuggling if the retail price is lowered further.
However, consumer rights activists have said that NOC has intentionally made the automatic pricing mechanism defunct and is reluctant to pass on the benefit of decline in fuel price in the international market to consumers.
“NOC will face problems in adjusting the price when price in the international markets go up,” said Prem Lal Maharjan, chairman of National Consumer Forum.
The last time NOC revised the price of petroleum products was in mid-January.
A version of this article appears in print on July 20, 2016 of The Himalayan Times.