It’s your duty

For a couple of years, the Nepal Oil Corporation (NOC) could not ensure an adequate supply of petroleum products across the country, creating serpentine queues at the petrol pumps. This happened because NOC could not pay the arrears to the Indian Oil Corporation (IOC) in time. NOC officials and ministers like Dr Ram Sharan Mahat said time and again that, to bring the oil supply to normal, it was necessary to hike the prices. After months of vacillation, the government raised the prices substantially on October 24. But the supply did not get any better for days; then, NOC officials and the supplies minister announced that, within days, things would become normal again, but weeks have elapsed since, and there is no hopeful sign. The reason is the same — the failure to pay the old oil bills to such an extent as to ensure supply. And now, NOC officials have started saying that since the last price hikes, the price of crude oil in the international market has gone from $83 per barrel to over $90, increasing the cost price further.

If so, the government should have the courage to do what is necessary. But it cannot let the shortages persist too long through non-action. Either subsidise the oil at the current prices, or raise the prices, but guarantee adequate supply. But non-action has led to a serious question whether there is any governance at all. The supplies minister has said that the government would make the money available to meet the arrears, but finance minister Dr Mahat said the other day that the government could not make the funds available. Whatever reasons he or finance ministry officials may have — for instance, the argument that most of the petroleum products are consumed in the urban areas, or the government’s liquidity position is weak — it is nevertheless the duty of the government to make sure that its own undertaking — NOC — pays the bills and makes the oil easily available.

If the government thinks it should restructure NOC, or also allow private firms to import and sell the petroleum products, or if it has some other better ideas, it is free to put these into practice. But, as long as the government owns and controls NOC, it cannot just say ‘no’ to NOC’s request for more funds — either grant or loan — to make the supply normal again. The fact that the finance minister and finance ministry officials have said so reflects a high degree of government irresponsibility. In such an important matter, sadly, the Prime Minister has proved helpless too, as on several other important fronts like the maintenance of the law and order. NOC already had, at the time of the last price hikes, over 10 billion rupees in arrears to IOC and domestic financial institutions. It may be argued that for some time creditors would have done better not to insist too much on payments of arrears, as, after all, NOC, a government undertaking, with such a long history of commercial transactions, has been a good debtor. The argument may have its merit, but once the creditor refuses to provide a facility for whatever reasons, any argument over it would prove futile.