Kathmandu, April 22:

The Nepal Oil Corporation decided today to reduce the supply of diesel and kerosene by 25 per cent to the distributors.

The NOC has cited surging price of oil in the international markets and its growing losses due to subsidy on imported fuel as the reason to reduce the fuel supply.

According to the sources in NOC and Nepal Petroleum Dealers’ Association, the NOC has already reduced the supply though it has not formally notified the dealers about the move.

“We have been forced to cut distribution since we are not in a position to maintain the supply until the price is hiked or the government compensates for the losses,” said NOC supplies manager Mukunda Dhungel.

Price of crude oil is hovering around US 115 dollars per barrel in the international market and the NOC, which has to pay around Rs 12 billion to Indian Oil Corporation, is complaining that it is incurring a monthly loss of almost Rs 1.35 billion.

NOC sources added that the fuel crisis would deepen in the days to come since IOC, the sole supplier, had agreed to maintain regular supply only for the month of April, considering the government’s request in the face of the constituent assembly election.

Though the ruling seven parties had agreed to hike the fuel price after the polls, immediate hike does not seem likely in the prevailing post-election period, NOC sources added.

NPDA’s concern

Kathmandu: “We are facing fuel crisis and the shortage would turn acute if the government does not act immediately to address the problem,” cautioned Narad Bhandari of the Dealers’ Association.

He said the crisis is already deepening since the NOC’s decision results in at least 35 per cent deficit of diesel and kerosene in the local markets as the demand for fuel has increased by 10 per cent over the last one year. — HNS