Nepal | June 07, 2020

NOC fails to implement dual-pricing system in liquefied petroleum gas

Himalayan News Service
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Kathmandu, August 18

Though it has been more than eight years since the government announced about implementing dual-colour liquefied petroleum gas (LPG) cylinders in the market, the state-owned Nepal Oil Corporation (NOC) has not been able to enforce the said dual pricing in LPG owing to lack of enough homework and actual statistics on the consumption of LPG for household use and commercial purpose with the corporation.

The plan to enforce the dual-colour LPG system targeting household consumption and commercial use got revived after Minister for Industry, Commerce and Supplies Matrika Prasad Yadav directed NOC, earlier in January, to implement the concerned system in the LPG market.

However, NOC has not been able to implement the dual-colour system in LPG though it claims groundwork is being done to implement the system in the future. “Currently, we are collecting the data on consumption of LPG cylinders for household use and commercial purposes,” said Sushil Bhattarai, deputy managing director at NOC.

Under this system, the government plans to introduce LPG cylinders of two colours in the market — red and blue — and sell red cylinders meant for household use at subsidised rates and the blue colour LPG cylinders for commercial users like hotels and restaurants without any subsidy.

As per NOC, implementation of this system is a lengthy process as it requires classifying gas dealers, identification of the demand of LPG for household use and commercial purposes and developing a legal mechanism to monitor distribution of subsidised LPG cylinders, among other factors.

In 2011, NOC had been subsidising almost Rs 800 on a cylinder of LPG for consumers when its cost price was around Rs 2,200 per cylinder. However, NOC stopped subsidising LPG in recent years after LPG price started falling.

The dual-cylinder-dual-pricing system in LPG primarily intends to subsidise only household consumers and ensure that those LPG cylinders that are used for commercial purposes are not subsidised.

Bhattarai said that introducing the dual-colour system in LPG is one of the major programmes of NOC and will be implemented soon.

As per NOC, there are almost 10 million units of LPG cylinders circulated in the domestic market. It is estimated that LPG bottlers and dealers collectively have over six million units of LPG cylinders while consumers have almost four million units of LPG cylinders.

A version of this article appears in print on August 19, 2019 of The Himalayan Times.

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