Editorial: Dealing in oil

A regulatory body to monitor the activities of NOC as well as the private firms involved would be necessary to deal with the various anomalies in the import and distribution of fuel

The government has decided to do away with the temporary license for the import of fuel from Thursday. The Department of Commerce (DoC) has instructed the banks and financial institutions to this effect. The government had been compelled to issue such a license for the import of fuel after facing a severe shortage of fuel including cooking gas. It has been over a month since India had ended its blockade at the custom points yet the consumers are finding it difficult to get fuel which has been a scarce commodity for months now. Following the government’s instructions, the banks and financial institutions will not issue the letter of credit (L/C) to the temporary license owners. A private firm was permitted to import and distribute petroleum products at the height of the oil crisis.

It is believed that the licenses were scrapped after there was controversy over the price set by the government and the private sector about what they should be charging for the petroleum products and also cooking gas. The DoC had authorized private firms to do so by providing them with licenses to import fuel in a temporary manner. However, it had failed to make specific requirements such as bank guarantee, tax clearance certificate, infrastructure to store and distribute oil. The government insists that it had taken this drastic step to encourage the private firms to also import fuel on a permanent basis. This requirement is clearly spelt out in the Petroleum and Gas Transaction (Regulatory) 2013 and also First Amendment, 2015. The law permits foreign investments for the purpose in the form of joint ventures for petrol trade. The owner has to register itself as a company at the Department of Industry. These measures envisage that most of the problems in fuel imports and distribution, arising out of the monopoly of NOC would be dealt with in an effective manner. A regulatory body to monitor the activities of NOC as well as the private firms involved would be felt essential to deal with the various anomalies in the import and distribution of fuel, as well as monitoring the petrol pumps throughout the country. Fuel is an item of mass consumption involving substantial investments, and the law has it that firms should have a fixed paid-up capital of Rs. five billion for companies who wish to do business in petrol, diesel, kerosene and aviation turbine fuel. The capital for liquefied petrol gas (LPG) has been put at Rs. two billion.

The private owned companies dealing in fuel would have to get their license renewed every ten years. Another requirement is that the companies should compulsorily have a storage facility of at least 20,000 kiloliters. The lack of such facilities has made Nepal vulnerable when supply is suddenly stopped for any reasons. Having the private sector to have their own distributors would also help mitigate the present shortage of fuel. Meanwhile, the fee for the temporary license to import oil which was fixed at merely Rs. 100 is ridiculous. However, the companies which have opened L/C to import will be permitted to do so to bring their consignment. While regulations for both NOC and private operators should be strict enough, investors should also be encouraged to enter the field.

Polluted city

The Kathmandu Valley has been listed as the third most polluted city in the world and the most polluted one in Asia. The doctors working in various government hospitals also said dust particles are the main cause of Chronic Obstructive Pulmonary Disease (COPD) though an authentic research has yet to be carried out to determine the factors leading to such diseases that affect a large population. Pollution, dust, as well as the smoke arising from brick kiln factories and vehicles that emit carbon dioxide are mainly responsible for making the capital city unhealthy.

Doctors have advised the denizens to use medicated surgical masks to protect one from pollution from dust or smokes. People spend millions of rupees every year to purchase general masks which are of no help to be safe from polluted environment. Haphazard construction of roads, old vehicles, over-population and unmanaged brick factories within the valley can be the major contributors of pollution. The Valley cannot be made healthy unless the government comes out with a long-term strategy.