Finance Minister Ram Sharan Mahat has said that the work on fixing the prices of petroleum products based on their international prices has reached final stages. Speaking at a programme in the capital on Saturday, he said selling the oil below cost has affected the economy, referring to the recent rising trend of oil prices in the world markets. According to him, a Bill to enable private sector to distribute oil will soon be passed. The government policy, Mahat said, is to gradually end government involvement, but at the same time ensuring smooth supply through ‘strict monitoring’. Indeed, after the latest hikes in Nepal, the world prices have gone up, making it difficult for Nepal Oil Corporation to offset its losses. It has yet to clear its arrears to the Indian

Oil Corporation (IOC) to the amount of three billion rupees. NOC has just put out a public notice, announcing that the import and sale of cooking gas has been opened up to private sector.

Just by saying, as Mahat often does, that the government cannot afford to sell below cost, it cannot get away from its responsibility, as NOC is the only importer and distributor of oil and, besides, it is fully state-owned. The long period of poor supply tells much about the level of the government’s competence and its sense of public duty. The consumers are ready to pay even higher prices for gas, petrol and diesel, but the products are in short supply. It is

hard to believe a government that could not supply oil to its citizens when it has been in sole charge of the distribution can ensure supply through ‘strict monitoring’ of the private distribution channels. Nearly a dozen commissions and study groups were formed in the past to find out ways of improving the distribution. They recommended liberalisation of the distribution and automatic price adjustments, among other things.

But the recommendations were hardly ever followed. Even now, the government is free to adjust the prices again. But it is not doing so, perhaps because it fears losing political capital with the general public. So it is thinking of getting round the problem by handing it over to private sector. But private sector hardly offers a panacea. The private operators are likely to form a cartel, as seen in so many other fields, and to maximise their profits. It is not necessary that the consumers will be benefit from this kind of ‘competition’. Oil is an essential commodity without which all other economic activities will come to a halt, and therefore it is a strategic commodity too. The government should also ponder the wider implications before it takes the plunge. Besides, in all probability, Nepal Oil Corporation may give, as many suspect, its physical infrastructure to private investors on a platter without having them create their own. Successive government leaders have been much less interested in starting the process of making the general people the main owners, instead of some big business, of public corporations, probably because it leaves no room for horse-trading. The Nepali Congress government’s ways of selling off several public corporations to big businessmen in the 1990s gave privatisation a bad name.