Kathmandu, November 9:

Petroleum dealers have found major faults with the petroleum sector reform proposal floated by the government, ostensibly for incorporating the private sector in the supply of petroleum products. In a fresh attempt to address the mounting losses of the state-run petroleum supply monopolist, Nepal Oil Corporation (NOC), government had floated the reform proposal for incorporating the private sector in petroleum products’ supply within the country.

As per the government proposal, NOC will import petroleum products up to customs points and supply the private dealers, instead of the existing practice of supplying through NOC depots. Under the proposal, the private dealers will be allowed to fix prices after adding transportation cost and some profit margin. However, Nepal Petroleum Dealers’ Association (NPDA) today termed the government proposal ‘illogical’, saying it will limit the private sector’s role in petroleum trade, while NOC will continue to enjoy monopoly over all imports.

NPDA has also asked the government to pursue a complete liberalisation programme and disinvest major shares of NOC to the private party, if the government is really serious about petroleum sector reforms. It has also suggested setting up an independent body comprising government officials, the private sector and experts to monitor the quality of supply as well as fix prices as per international prices. “The private sector is wil-ling to shoulder the problems that NOC faces,” said Shiva Pra-sad Ghimire, president of NPD-A. He also pointed out the need for proper price deregulation, “Let the price be fixed as per the international trend.” He further added the government should give up on NOC’s monopoly on petroleum imports, if it envisages a complete liberalisation of petroleum trade and pricing.

“If we go with the government’s proposal, existing infrastructure of NOC worth millions of rupees will go waste,” said Ghimire, adding that a new infrastructure will be needed if delivery is to be taken from the customs points. “It means additional resources will be needed.”

NPDA has also asked the government to disinvest 51 per cent of share of NOC to private parties involved in the petroleum trade, if the government is serious about handing over the petroleum trade to the private sector. “If the government agrees on setting up an independent body and deregulate pricing, Nepali private sector is ready to take up the responsibility of petroleum supply,” said Sharad Kumar Bhandari, general secretary of NPDA.