KATHMANDU, April 3: Nepali consumers have been hit hard by rising petroleum prices triggered by unrest in West Asia. While consumers are being forced to pay higher prices, the Nepal Oil Corporation (NOC) is also incurring an average daily loss of around Rs 880 million.
Consumers have been affected due to high fuel prices in the international market and heavy taxation on petroleum products imposed by the government. The closure of the Strait of Hormuz and attacks on oil refineries in the Gulf region have driven up crude oil prices in the international market, the impact of which has also been felt in Nepal.
According to prices received from the Indian Oil Corporation (IOC), NOC will incur a loss of Rs 13.21 billion in 15 days, said NOC spokesperson Manoj Thakur. “For the past month, petroleum prices have been rising in the international market due to the war in West Asia,” Thakur said. “As prices have increased from the IOC but have not been adjusted domestically, the corporation is facing a huge loss.”
According to Thakur, between March 16 and 31, the corporation incurred a loss of around Rs 5 billion.
NOC stated that according to the price list received from the IOC on March 31, the price of petrol increased by Rs 41.60 per liter, diesel by Rs 94.93 per liter, aviation fuel by Rs 123.08 per liter, and LPG gas by Rs 190.36 per cylinder. “Although prices have risen, we have not adjusted prices except for aviation fuel,” Thakur said. “We were already selling at a loss, and now the loss has increased further.”
NOC’s accumulated loss reaches Rs 31 billion
Currently, NOC said it is selling petrol at a loss of Rs 47.12 per liter, diesel at Rs 133.45 per liter, and LPG gas at Rs 416.37 per cylinder. The corporation has also increased aviation fuel prices but has kept cooking gas prices unchanged.
A meeting of the NOC board of directors recently increased the price of domestic aviation fuel by Rs 124 per liter, raising it from Rs 127 to Rs 251 per liter. For international flights, the price in Kathmandu has been increased by USD 819 per kiloliter, bringing it to USD 1,785 per kiloliter.
The NOC currently has about Rs 19 billion in its price stabilization fund. NOC has been covering its losses from this fund. According to the corporation, the entire amount may be exhausted within a month. “If prices are not adjusted, the fund will be depleted within the next 15 days,” Thakur said.
Last week (March 25), the corporation increased petrol prices by Rs 15 per liter and diesel by Rs 10 per liter followed by another hike of Rs 15 each on April 3.
The government currently collects around Rs 62 per liter in taxes and charges on petrol and around Rs 43 per liter on diesel, including customs duties, road maintenance fees, pollution charges, infrastructure tax, value-added tax, and contributions to the price stabilization fund. Consumer rights activists say that since the government collects high taxes, prices should not be increased further and instead taxes should be adjusted.
Madhav Timilsina, president of the Consumer Rights Investigation Forum, said the new government should reduce taxes to provide relief to consumers. “People can no longer bear further increases in fuel prices,” Timilsina said. “The government should reduce taxes to give relief to consumers.”
However, officials at NOC say that if prices are not adjusted under the current circumstances, the corporation will not be able to sustain operations. Chandika Bhatta, managing director of NOC, said reducing infrastructure and road maintenance taxes could help provide relief to consumers. “So far we have been using funds from the price stabilization fund,” Bhatta said. “But it is becoming increasingly difficult to sustain.”
Officials at the corporation argue that a balance could be maintained by sharing the burden among consumers, the corporation, and government funds. Otherwise, the corporation warns that fuel supply could face serious challenges. NOC has also urged consumers to reduce consumption as petroleum prices in the international market continue to rise and may increase further in the coming days.
NOC imports fuel from the IOC and sells it in Nepal. The Indian government has also significantly increased the price of commercial LPG cylinders for its consumers. In Delhi, the price of a 19-kg commercial LPG cylinder has increased by INR 195.50, reaching INR 2,078. Similarly, the price of a 5-kg FTL cylinder has increased by INR 51, bringing it to INR 549.
