First of all, there is an urgent need to open up the sector. NOC presently is not only the regulator but also the sole importer and distributor of petroleum products that, at the outset, is against our much touted free market policy. This has to change soon. Only when private players are allowed to enter the market and the regulatory functions of NOC transferred to another body, say Nepal Petroleum Authority, would we start witnessing positive changes in the petroleum market of Nepal that is now more often than not marred by the issue of shortages of petrol, diesel, kerosene and LGP thus greatly inconveniencing the general public.
The government’s fears of opening up the market to competition perhaps stems from the fact that it would lose control on the pricing of such vital products depriving them of an important populist political tool. But why does it not understand that subsidies on petroleum products are only mostly helping the already better-off in the society. Petrol is mostly consumed by the urban-centric population who are a minority in the country. So is the case with LPGs. They must understand that eventually the Nepali people stand to gain if subsidies are lifted because the state resource spent to finance subsidies can then be used to open up schools and health posts in the hinterlands of Nepal. This we think is more important than dolling out subsidies to those who can do without it.
But the report in question is contradictory on this very issue. While it talks about opening up the market, it says that losses of NOC should be distributed equally among the government monopoly, the state and consumers. We cannot fathom how there will be fair competition between private players and NOC when the latter is expected to continue getting help from the government. We hope an explanation will follow soon.
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