Oily deal

The state-run Nepal Oil Corporation (NOC), in order to involve the private sector in the supply of petroleum products, had recently floated a reform proposal to the petroleum dealers. Not surprisingly, the private sector has shown a willingness to enter into this business; however, the private dealers, which number about 2,500 have found the proposal a shade too illogical and are seeking better terms. The NOC has proposed that it will import petroleum products from the Indian Oil Corporation and supply the dealers at the customs points instead of the current practice of supplying the products through its own depots in various parts of the country. This would render all its existing depots redundant on the one hand and would necessitate the construction of many new depots near the customs points involving heavy expenditure. The NOC wants to allow private dealers to fix their own price within a certain range after adding transportation costs and profit margin. According to the dealers, this does not appear to be lucrative enough, as there is a vast difference between petroleum price purchased from the IOC and the subsidised rates charged to the public.

Indeed, nobody will do business at a loss. Therefore, the government should offer terms that promise a reasonable return to private dealers, at the same time taking care that participation of the private sector will not mean exorbitant price for the consumers. Besides, the government could also consider selling a certain portion of NOC shares to private investors, including the general public. However, it may not be wise to leave the supply of this strategic commodity in the hands of a few private entrepreneurs alone. In addition, there is a need to form an autonomous body comprising all the stakeholders to supervise and monitor the all-important aspects of petroleum supply. There should also be healthy competition among private traders to ensure quality goods at a reasonable price.