Fuel scarcity

It is distressing that the state has failed to ensure smooth supplies of even basic commodities like petroleum products. Nepal Oil Corporation (NOC) had announced last week that it was pumping out enough fuel to restore normal supplies by last Friday, but the lingering scarcity indicates that the panic is nowhere near an end. In a country which already imposes power cuts of 11 hours daily and projects increasing the outage duration to 18 hours, petroleum products are the only reliable source of energy. Sadly, the government has failed to fulfill even the demand for this.



The mess in the petroleum sector is nothing new. It’s just the bad legacy of political inaction. As a country that depends entirely on petroleum imports and has little cash to spare, Nepal simply cannot continue with is subsidy regime. Every politician acknowledges this fact. But when the time comes to take the rational decision, governments always let the issue linger.



This indecisiveness has pushed NOC, the state-owned petroleum import monopolist, into a cumulative loss of Rs 19 billion. Its outstanding loan has jumped to Rs 21 billion, an amount that could easily have funded a thermal plant of 100 MW capacity. Worse still, the government has yet to plug the import-retail price gap.



Thanks to ad hoc decision-making, the corporation -- which is suffering a net loss of Rs 17.84 per liter of diesel, Rs 1 per liter of petrol, Rs 7 per liter kerosene and Rs 431 per cylinder (14.2 kgs) of liquefied petroleum gas -- is finding that its funds are depleting by Rs 1.5 billion a month. With such huge losses, no organization, no matter how efficient and clean, can ensure smooth supplies, leave aside a corrupt and inefficient outfit like NOC.



With Minister for Commerce and Supplies Lekh Raj Bhatta himself attributing the shortage to the huge losses and seeing no improvement in the situation unless these are plugged, the supply will continue to remain a mess. We totally agree, Minister Bhatta, that Nepal cannot sustain such losses, that there must be adjustment of petroleum prices in line with international trends.



However, we would like to point out that merely realizing this will not end the problem. The government must act accordingly. People queuing at petrol pumps are fed up with mere rhetoric.



We urge the government to immediately give up its ad hoc pricing system and introduce a scientific, automatic price mechanism. Simply doling out hefty loans to NOC is not going to work. The government must deregulate prices in a planned manner, bring in the private sector and induct competition. This alone will serve consumers and the economy as a whole in the long run.

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