The only way out of the crisis is to switch to electricity for daily commute, cooking and running industries
The state-owned Nepal Oil Corporation (NOC) has no option other than to hike the prices of petroleum products to make up for its loss, running to the tune of billions of rupees every month. Although the government last week decided to cut its tax on imported fossil fuels by Rs 20, consumers still feel the heat as the NOC has once again increased the prices of petrol, diesel, kerosene and domestic aviation fuel with effect from Tuesday. The NOC has hiked the price of petrol by Rs 2 per litre, and diesel and kerosene by Rs 9 per litre and aviation turbine fuel for domestic airlines by Rs 5 per litre. From now onwards, petrol will cost Rs 181 per litre, while diesel and kerosene will cost Rs 172 a litre. Aviation fuel for domestic airlines will cost Rs 190 a litre. However, the price of LPG has remained unchanged, which stands at Rs 1,800 per cylinder. The NOC said the new price adjustment was made on the basis of the fuel price list sent by Indian Oil Corporation (IOC), which is the sole supplier of petroleum products to Nepal. The NOC has been following the automatic pricing system for the fossil fuels since 2014.
The NOC's outstanding dues to the IOC have already reached around Rs 22 billion, and a monthly loss stands at around Rs 10.5 billion, while a cumulative loss will stand at around Rs 55 billion by mid-July.
In order to cope with the increasing loss, the NOC has suggested the government introduce a quota system in the distribution of petroleum products and also introduce the odd-even rule for vehicles to reduce consumption of the expensive fuels. In letters addressed to the concerned government ministries, including the Office of the Prime Minister and Council of Ministers, the NOC has proposed providing five litres of petrol for two-wheelers and 20 litres of petrol or diesel for cars and jeeps. The NOC officials claimed that they used to adjust the prices of the imported fuels based on the price list provided by the IOC, but the rates were revised down as per the government instruction, which, they said, led to heavy losses for the NOC.
Earlier, the government had promised to compensate the NOC for the loss incurred due to lowering of prices of the petroleum products. But there has been no further communication from the government side since it lifted the taxes on June 25. Instead of providing compensation to the NOC for the cumulative loss, the Finance Ministry is learnt to have told NOC to mortgage its head office to obtain Rs 3 billion in loans from Rastriya Banijya Bank. Even if the NOC obtains the said amount from the bank, it is just peanuts, which will not be enough to pay back the outstanding dues to the IOC. Likewise, the foreign exchange reserve, as per the Rastra Bank, is enough to purchase goods and services only for six months, which is at an all-time low due to reduced inflow of remittance and low earning from tourism. The only way out of the current crisis is to switch to electric vehicles for city commute, induction stoves for cooking and heavy use of electricity for running industries and hotels to replace the petroleum products, which consume a large part of the foreign exchange reserve that is also dwindling due to various factors beyond our control. Unless tough measures are taken, the NOC will not be in a position to supply the fuels.
Tourism looking up
Tourism is showing a rebound with 237,660 tourists visiting the country in the first six months of this year. A total of 46,957 visitors from different countries came to Nepal in June, although a drop by about six thousand tourists compared to the month of May. This was understandable as the monsoon rains began with the onset of June, when visitors in search of adventure tourism stay home. According to the Department of Tourism, the highest number of visitors were from the SAARC region - 26,030 - with India accounting for the bulk at 23,248 tourists.
Nepal could have seen many more visitors if China had not resorted to multiple lockdowns in key cities such as Beijing, Shanghai and Shenzhen to control the coronavirus pandemic. And just when the prospect of tourism was looking up with the end of COV- ID-19 in most countries, the war in Ukraine has dampened the people's enthusiasm for travel. Tourists from the West usually visit Nepal during the spring or autumn seasons. So let's keep our fingers crossed that things will be even better from September this year. And with south Asia under a spell of unbearable heat during this time of the year, it is time to plan for a summer tourist season as well.
A version of this article appears in the print on July 6, 2022, of The Himalayan Times.
