If empirical study of Nepal Rastra Bank is anything to go by, this will straight away jack up inflation by more than a percentage point, apart from forcing the consumers to pay more for the fuels. Wednesday´s hike in petrol prices has forced the consumers to pay additional Rs 175 -- over 13 percent of hike on existing price -- per cylinder (14.2 kgs) of liquefied petroleum gas (LPG), the popular household fuel, with immediate effect. [break]
The price-hike also rendered the price of diesel and kerosene expensive by Rs 9 (almost 12 percent) while petrol became dearer by Rs 10 per liter (over 9.5 percent). The price of aviation fuel for domestic airlines too has been increased by Rs 5 per liter.
Consumers will now need to pay Rs 115 per liter of petrol, Rs 85 per liter of diesel and kerosene, Rs 1,500 per cylinder of LPG and Rs 105 per liter of aviation fuel, said Mukunda Dhungel, spokesperson of Nepal Oil Corporation (NOC).
The raise in petroleum prices instantly drew flaks from various quarters who raised concerns for general consumers, who were so far cushioned by undeclared state subsidy worth over Rs 1.78 billion a month.
“We understand the pain it will inflict on individual consumers. Sadly, price hike is not a choice but a compulsion for us,” said Minister for Commerce and Supplies Lekh Raj Bhatta.
He even acknowledged that without due price-hike, something which severely impacted NOC´s ability to import adequate quantity of fuels, the government is simply failing to maintain normal supply. “This (squeezed price), hence, was causing only huge losses to individuals and the economy,” he added.
Following the hike, officials at the Ministry of Commerce and Supplies (MoCS) claimed NOC´s revenue will improve and it will be able to maintain normal supplies.
The new retail rates have enabled NOC to enjoy a profit of Rs 3.79 per liter on petrol, Rs 1.73 per liter on kerosene, Rs 17.18 per liter on aviation fuel supplied to domestic airlines and Rs 26.17 per liter on aviation fuel supplied to international airlines.
Despite such profits, NOC said its revenue will not improve as the ministry officials have claimed because the price-hike still has not completely plugged its losses.
NOC´s losses still stand at around Rs 861 million per month, said Dhungel. “That is because we are still suffering a loss of Rs 12.90 per liter on diesel, which accounts for 60 percent of total petroleum trade,” he added.
Apart from that, the new retail rate of a cylinder of LPG is still Rs 276.72 less that what the corporation pays while importing it.
Nonetheless, NOC officials echoed with MoCS officials over improvement of supply situation in near future.
According to Dhungel, NOC will restore normal supply of petroleum products within two to three days. As for diesel and LPG, their supply situation will need a week to return to normal.
Amid mounting losses, the corporation that faced troubles in managing its inventory and fund flow has been supplying less fuel in the market. As a result, consumers across the country have been reeling under shortage of petrol, diesel and LPG over the last three weeks.
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