Kathmandu, May 4:

With prices of petroleum products soaring in the international market and shaky financial health of the Nepal Oil Corporation, the country is on the verge of yet another petroleum crisis.

“Within a few days, we are likely to face a crisis like the one we experienced during the last Madhes movement. Queues at pumps are swelling and supply is decreasing by the day,” cautioned Narad Bhandari of the Nepal Petroleum Dealers’ Association.

The state-run oil monopoly has said the supply of petroleum products will dwindle further this month unless the government comes to its rescue. It has called on the government to either dole out more money to cover “ever-growing losses caused by subsidies” or hike fuel prices.

The corporation had slashed the supply of diesel and kerosene to dealers by 25 per cent after the April 10 polls, which adds up to around 35 per cent deficit as the demand for these petroleum products has increased by at least 10 per cent over the last one year.

“Quantum of supply will dwindle further if there is no immediate intervention from the government,” NOC supplies manager Mukunda Dhungel cautioned.

As requested by the government, the Indian Oil Corporation had maintained a steady supply of petroleum products in the run-up to the April 10 polls.

“Now, the import depends on our capacity to finance it,” Dhungel said. He said the NOC managed to pay only INRs 640 to the IOC, the sole exporter of petroleum products to Nepal, on May 2.

Going by current prices in the international market, Nepal needs to pay around INRs 3.57 billion each month to the IOC to meet the demand for petroleum products. On the other hand, NOC complains that, as per the revised fuel prices forwarded by the IOC on May 2, the NOC would incur a whopping loss of Rs 1.67 billion per month.

It is incurring a loss of Rs 8.51 in the sale of one litre of petrol, Rs 27.45 per litre diesel, Rs 22.93 per litre of kerosene and around Rs 290 per LPG cylinder.

The NOC and dealers maintain that it is high time the government did some serious homework to hike the fuel price rather than bleeding the exchequer to make up for the losses due to heavy subsidies. With the incumbent government not taking initiatives to review the prices, the shortage of fuel is likely to persist for sometime. The government was forced to roll back its decision to hike the prices several times after after the hike sparked protests across the country.