Fossil fuel crisis unlikely to be resolved soon

NOC, supply ministry play blame game as situation deteriorates

KATHMANDU, Oct 16: The fuel shortage become so pronounced that getting an LP gas cylinder or a few liters of petrol or diesel is now a daily struggle in Nepal. Owing to the ongoing fossil fuel crisis, a majority of industries, including pharmaceutical companies, have stopped operations and some are on the verge of closure. Moreover, the acute LP gas -- the preferred fuel for cooking -- shortage has hit consumers in Kathmandu Valley especially hard and many have altogether stopped cooking food and are relying on junk food, or looking for alternates like firewood or electricity for food.

While the fuel crisis has made regular life troublesome, it has already hit Nepal's economy in a big way. The World Bank last week cut Nepal's economic growth forecast to a mere 3.4 percent for Fiscal Year 2015/16 from the government's target of 6 percent.

However, it seems like the reality of the deteriorating economy and the hardship of the people living in Nepal are yet to be felt by the government, as the government bodies responsible for fuel supply have started trading barbs on who is to blame instead of working together to bring supplies back to normal.

The Ministry of Commerce and Supplies (MoCS) and Nepal Oil Corporation (NOC) -- the two main government bodies responsible for supplying fuel to retailers -- are saying it is the responsibility of the other body to normalize the situation. NOC itself falls within the purview of MoCS.

As the two continue bickering and shifting responsibility for managing the fuel supply, the crisis in the market is getting worse every day and normal life is becoming more difficult.

NOC HAS FULL AUTHORITY, MINISTRY SAYS

MoCS believes that the sole responsibility for importing fuel -- and therefore also for normalizing the current fuel crisis -- is NOC's.

As the government has already directed NOC to break the supply monopoly of India Oil Corporation (IOC) and import fuel from any other party or country, MoCS officials say that NOC can now do anything to manage the ongoing fuel crisis.

"The cabinet and the Office of the Prime Minister and Councils of Ministers (OPMCM) has already given NOC the authority to manage the crisis by any means necessary. So NOC should stop dawdling, identify the best option available and immediately take steps to normalize the fuel crisis," a high-ranking MoCS official told Republica, adding: "NOC should stop blaming the ministry or the government. It does not have to wait for the government's approval for any decision aimed at normalizing the current fuel crisis."

He says the cabinet's direction means that the NOC management has full discretion to take decisions to import fossil fuels from any party other than IOC and take any measure to give short-term relief to the people, the official said, "Why is NOC not using its authority to take concrete decisions immediately? What is it still waiting around for?" The MoCS official also urged NOC to award the supply contract to the best proposal it received in a call for Expression of Interest (EOI) and allow the selected company to start supplying fuel to Nepal as soon as possible.

After IOC, which has been supplying petroleum products to Nepal for last four decades, failed to regularly supply fossil fuels to Nepal for two weeks, NOC last Thursday had called for an EOI, seeking firms who could temporarily supply petroleum products to Nepal. NOC has received proposals from 22 firms interested in supplying petroleum products to Nepal in this manner.

IT'S TOO EXPENSIVE, WE NEED DIPLOMATS: NOC

NOC officials, however, say they believe that importing fuel from other countries is only possible through diplomatic channels. NOC officials say that there has to be government-to-government dialogue with any other nation before importing fossil fuel so that any company can supply fuel in an easy and effective manner.

Last Sunday, NOC had written a letter to MoCS asking it to try and use diplomatic channels to import petroleum products from Nepal's the northern neighbor China after a majority of bids proposed supplying of petroleum products from China.

MoCS forwarded the NOC letter to the Ministry of Home Affairs (MoHA) on Wednesday citing that issues related to diplomacy is to be handled MoHA.

"Importing fuel from other countries is possible only after Nepali government holds high-level government-to-government talks with the country from which the bidders have proposed," an NOC official told Republica.

Moreover, Gopal Khadka, the managing director of NOC on Thursday said at a meeting of the Committee on Commerce, Industries, and Consumer Welfare Relation that NOC was not in a condition to immediately let any of the bidders import petroleum products to Nepal as most of the bidders have quoted high rates.

Khadka said most quoted prices were more than double the existing rate. "The government should either try to reduce fuel rates through diplomatic channels or allow NOC to buy at these high rates."

SO, WHEN WILL FUEL

SUPPLY BE NORMAL?

The ongoing fuel crisis seems like it might last for a long time, even months, as the government has neither been able to make long-term plans to maintain sustainability of supply of petroleum products in market, nor has it made an effective short-term plan.

Though the NOC was directed to import fuel from other nations and address the ongoing fuel crisis temporarily, NOC is lingering before taking a decision. Though NOC announced the EOI last Thursday and received bids from 22 firms, it has not yet been able to finalize the lowest and best bidders yet.

However, NOC spokesperson Deepak Baral said: "We will complete screening all the bids by Thursday evening and table the summary of all bids at NOC board on Friday."

NOC is already late. Even if it announces the name of the winning bidder on Friday, the crisis is unlikely to be fully solved immediately as the new supplier is supposed to supply 200 kiloliters of diesel, 100 kiloliters of petrol, 100 kiloliters of kerosene, 200 kiloliters of aviation fuel and 100 tons of LP gas on a daily basis for only two weeks while the demand for fossil fuels has risen manifolds. The government doesn't have any plans on what next after two weeks.