KATHMANDU, DECEMBER 8
Consumer rights activists and other stakeholders have slammed the decision of the Nepal Oil Corporation to maintain fuel prices in the domestic market citing huge outstanding dues to the government and the Indian Oil Corporation, despite making a gross profit and oil prices falling to their lowest level this year.
According to Reuters, the price of oil fell to its lowest level this year yesterday, forfeiting all of the gains since Russia's invasion of Ukraine exacerbated the worst global energy supply crisis in decades.
Prem Lal Maharjan, president of the National Consumer Forum, termed the NOC's decision to not slash fuel prices as 'daylight robbery'.
"Citizens willingly paid as much as Rs 199 for a litre of petrol when the NOC was incurring heavy losses in the past. But refusing to reduce its price in tandem with global rates is daylight robbery."
However, Binitmani Upadhyay, spokesperson for the NOC, defended the corporation's decision stating that the NOC still has outstanding dues to the Nepal government and the IOC. "We have to maintain fuel prices to ensure regular fuel supply in the market and have decided to slash prices when the situation eases further in coming days," he said, adding the oil price in the international market is very volatile at present.
But the NOC's decision has had far-reaching consequences as it has also dented market recovery, say private sector stakeholders.
"The high fuel prices have increased the operational cost for industries and lowered demand," explained Dinesh Shrestha, vice-president of the Federation of Nepalese Chamber of Commerce and Industry - the largest umbrella organisation representing the private sector.
As a public entity, the NOC's responsibility should go beyond just maintaining profits, he opined.
Meanwhile, both Maharjan and Shrestha wondered why the auto pricing system that was introduced in 2014 had been scrapped.
But according to NOC Spokesperson Upadhyay, the system had failed when the oil prices started skyrocketing and it forced the NOC to incur heavy losses as the system did not allow fuel prices to be revised up by more than a rupee or two. "The auto pricing system still exists but we are forced to maintain prices due to our current position."
As per the revised list sent by the IOC on December 1, the NOC is facing a loss of Rs 277.02 per cylinder of LPG. Meanwhile, the corporation is making a profit of Rs 13.16 per litre on the sale of petrol, Rs 0.53 per litre on diesel, Rs 35.35 per litre on kerosene, and Rs 89.93 per litre (bonded) and Rs 42.16 a litre (duty paid) in sales of aviation fuel. The NOC is expected to incur a loss of Rs 360.85 million on LPG sales and make a profit of Rs 580 million on the sale of petrol, diesel, kerosene, and aviation fuel by mid-December.
According to Upadhyay, the NOC faced a loss of Rs 50 billion in the last fiscal year. "We are auditing our financial reports which will be presented in our general assembly for everyone to see. The NOC had to take a loan from the government to pay some of its dues to the IOC and is having to pay interest at the moment," he added.
A version of this article appears in the print on December 9, 2022, of The Himalayan Times.
