The force of impact

Friday’s sharp hike in the price of the petroleum products was unquestionably an immature decision taken without proper homework. Its withdrawal two days later under strong public protests represents not only some loss of face for the SPA government, all the more so of the supplies and finance ministers, but also an erosion in its credibility. Perhaps the hikes sprang from some sort of panic the government felt at Rs.9 billion it owes to the Indian Oil Corporation, which has been insisting on payment or threatening to stop the supply. And probably in an even more panicky situation, the government had to roll back the hikes to douse the flames of public protests. But it is only a stopgap arrangement till a three-member team submits a report in a month.

The public has been bearing with almost every price hike stoically, but successive governments have never felt the need for transparency about why the public has to pay more, except for the reason of ‘huge’ losses the supply agency incurs. There is no doubt that the Nepal Oil Corporation (NOC) continues to run up gigantic losses, put at Rs.830 million per month. The simplistic corrective formula is to raise the price to the level of the deficit. Even an illiterate person can do this sum; it does not require a Hridayesh Tripathi or a Ram Sharan Mahat. The public wants an enlightened decision from the government, which is supposed to look for ways to ensure smooth supply and a fair price. What it does not want is to be made to subside the inefficiency, leakage and corruption at NOC and in the government.

The two-day drama has exposed further the want of collective responsibility among the ministers. It has raised questions about their morality. The SPA government, established through the popular movement just less than four months ago, seemed to follow in the footsteps of its predecessors. But the public has given the rulers a piece of its mind, which may have implications for the constituent assembly elections in that the public may not remain mute spectators if the mandate of the Jana Andolan II is overlooked. The previous government, in the name of leaving the price-fixing to the private dealers, allowed them to cut a high profit margin at the public expense. The nexus between the oil mafia at NOC and private dealers, along with government officials’ involvement in this shady business, has become just too well known to be ignored. Effective cost-cutting measures must start at NOC before the government raises the prices again and the network of the mafia must be broken. Besides, high taxes (averaging at around 30 per cent) on the petro-products — even kerosene, the basic need of poor people, has not been spared — is a major factor in increasing the people’s burden. A total transparency about how the cost accumulates at each stage from the purchase of crude abroad through its refinement in India to the selling price of the commodities at home has to be guaranteed. These factors should be reviewed to make the burden on the public as tolerable as possible. To reduce the oil import bills, the government should also look for alternative energy and stress economical use of petro-products, which, in turn, would of course trigger a battery of decisions.