The government can remove some of the taxes levied on the imported fossil fuel at the customs points
With the state-owned Nepal Oil Corporation (NOC) again deciding to increase fuel prices by Rs 21 per litre for petrol, Rs 27 per litre for diesel and kerosene, and Rs 19 per litre for domestic aviation fuel, it will have rippling effects on other commodities that are transported from one place to another.
The new price list of the imported petroleum products came into force from Monday. Following the NOC's decision to hike prices of the petroleum products, petrol now costs Rs 199 per litre and diesel and kerosene Rs 192. Air and road travel as well as transportation of goods will become very expensive, beyond the reach of the ordinary people. It will trigger massive price escalations of consumer goods, most of which are imported from India, which is also facing a shortage of coal, natural gas and other petroleum products. The fragile agriculture sector will be hit hardest due to unavailability of chemical fertilisers.
The seizure of chemical fertilisers by the local farmers at Dharke, Dhading a few days ago speaks volumes about the acute shortage of fertilisers during the paddy plantation period. Nobody will be able to fly within the country because of high airfares, largely because of the hike in domestic aviation fuel.
Last time, the NOC had raised the price of cooking gas from Rs 1,600 a cylinder to Rs 1,800. Still the NOC says it faces a loss of Rs 715 per cylinder. Should the situation continue, the NOC will have no option other than to raise its price of LGP - up to Rs 2,600, which will have severe impact in the kitchen.
Student unions affiliated with the opposition parties took to the streets demanding that the NOC, which is already suffering losses to the tune of billions of rupees every month, roll back its decision.
The ripple effect has e Department of Transport already been seen, with the Department of Transport Management increasing the fares for long distance public vehicles by 5.3 per cent, freight vehicles operating in the hilly and Tarai region by 6.94 per cent and 7.7 per cent, respectively.
As the government's source of foreign currency earning is drying up, it cannot provide any subsidy to the NOC to stabilise the prices on petroleum products.
What it can do for the time being is to remove some of the taxes, such as infrastructure tax and pollution tax, levied at the customs points, while importing the petroleum products. It can at least give some solace to the consumers though the government's revenue will go down. The government should have encouraged the people to use electric vehicles by slashing the customs duty on the import of electric vehicles. But sad to say, the Finance Minister has raised the customs duty on electric vehicles in the fiscal budget presented for the year 2022/23. As the war between Russia and Ukraine has created shortages of food and fuel worldwide, and there is no sign of a let-up anytime soon, the government should expedite exploring the petroleum reserve in Dailekh, where a Chinese firm is drilling at various sites. A preliminary study has shown encouraging signs about the prospect of petroleum deposits there, which will be enough to meet the domestic needs if it is proven to be economically viable. Nepal will no longer have to rely on imported fuels once it starts pumping up the fossil fuel in Dailekh.
Classify lands
It's rare for the government to be able to implement any of its policies or decisions without some form of intervention from the Supreme Court. Just days after the government took a decision to prevent disbursement of loans by financial institutions against fixed property until the land had been classified, the apex court has stayed the decision. The government had adopted the Land Utilisation Policy three years ago in a bid to stop the rampant plotting of arable land for housing purposes, leading to food insecurity in the country. To implement the policy, the Land Utilisation Regulations-2022 were introduced recently.
But classifying land for different purposes - agricultural, housing, forested area, industry, infrastructure and the like - is likely to take years. But for those who have no assets other than a piece of land, such as students going abroad for higher studies or migrant workers - it is apparent that they cannot wait so long. But if land is allowed to be mortgaged for a loan, it becomes the property of the bank until the borrower repays the debt. So it would be in the interest of everyone if the federal government classified all lands without delay in coordination with the local levels.
A version of this article appears in the print on June 22, 2022, of The Himalayan Times.