Sources further informed myrepublica.com that the corporation’s import rate for aviation fuel has plummeted to Rs 58 per liter and liquefied petroleum gas (LPG) to Rs 1,150 per cylinder.
NOC reluctant to enforce automated pricing system even as it ea...
NOC profits
- Petrol: Rs 23/L
- Kerosene: Rs 14/L
- Diesel: Rs 7/L
- Aviation Fuel: Rs 27/L
- Cooking Gas: Rs 100/Cylinder
Compared with the present retail prices, the corporation is earning a profit of Rs 23 per liter of petrol, Rs 7 per liter of diesel and Rs 14 on kerosene. The debt-ridden corporation is further reaping profits of Rs 27 on a liter of aviation fuel and Rs 100 on a cylinder of LPG.
“The new rates issued on January 16 by IOC have slightly raised the import prices for petrol and diesel. But still the NOC is set to earn a near Rs 1 billion in profit this month,” stated the source.
With the profit, consumer organizations have urged the government to substantially lower the prices of petroleum products. However, sources indicated that the government might not heed the price-cut demand for now.
“Prices will be cut, but the rate of cut will not be as high as people have been demanding,” stated the official.
The government had applied a similar strategy when it lowered petroleum prices three times over the last three months. It has effected nominal adjustment in prices to pacify consumers and allowed the corporation to reap profit of Rs 500 million every month during the period.
As for the next price cut, sources indicated that the government might not lower prices until India takes a similar decision. The idea behind such an approach is to wait and see how the benefits are transferred on the other side of the border.
“We want to see how the prices move on the other side of the border, as our recent strategy has been to prevent creation of a substantial gap on pricing across the border,” stated the source. The government has resorted to this strategy as gap in cross-border pricing triggers smuggling and "leakage".
NOC, meanwhile, has resisted immediate changes in the domestic prices of fuel.
NOC chief Digambhar Jha, who always advocated free oil pricing policy during the loss era, citing huge outstanding liability of the corporation has urged the government not to lower the prices immediately.
“We still have dues worth Rs 13 billion we need to pay to our financiers including the government. Besides, we neither are sure when the import prices will go up again nor do we have any mechanism to ensure due price adjustments if the prices go up,” stated Jha.
Nepal suffered a oil loss of Rs 22 billion over the last five years as the government did not adjust domestic prices in line with international trend. Moreover, as the state did not extend direct subsidy to the people, NOC was forced to shoulder all the losses. This eventually strapped it off with cash and turned it technically bankrupt.
milan@myrepublica.com
