KATHMANDU, April 1: Price of crude oil in the international market plunged to an almost 18-year low at US $ 20 per barrel on Monday. However, Nepali consumers are bound to keep on paying the higher prices as usual, and this despite the fact the country has adopted an automatic pricing policy. According to Reuters, crude prices on Monday tumbled to $20.09 a barrel in the face of growing prospects of the global coronavirus shutdown lasting for months, further squeezing the demand for fuel. The last time oil fell this low was in November 2002. Apart from the COVID-19, international media has attributed the current crash to the price war between Saudi Arabia and Russia following the collapse of a three-year deal to limit supply that was reached between the Organization of Petroleum Exporting Countries (OPEC) and other producers led by Moscow.
With multiple reasons in place, petroleum has been in free fall globally. Crude prices are down 69% since last January when they stood at US$ 64 a barrel. In the midst of such dramatic movement, Nepali consumers continue to shell out prices at the higher end for their petrol and other carbon fuels. The authorities sitting atop the supply chain refuse to budge. They refuse to factor in the plunge in the international price and instead resort to fuzzy arithmetic to cloud the issue.
The nosedive in the price graph notwithstanding, Nepal Oil Corporation (NOC), the supply monopolist, has revised the price downwards only nominally. Citing various pretexts, it has reduced the price by a paltry Rs 4 per liter on average in the past three months. The automatic adjustment mechanism hardly figures.
Earlier, in mid-March, NOC slashed the petroleum price by Rs 2 per liter after an almost 50% fall in crude prices in the global market. This brought the state-owned enterprise a windfall profit of more than Rs 1 billion per month.
The Auto Pricing System by-law requires NOC to revise the price of petroleum products including cooking gas on Wednesday. However, there is slim chance that will happen this time either, according to NOC officials.
Binit Mani Upadhyaya, spokesperson for NOC, hinted that they may not revise the prices at all this time. “With the ongoing unusual situation created by the threat of COVID-19, the enterprise has focused more on maintaining smooth supply,” he said.NOC of late has been maintaining stocks of petrol, diesel and aviation fuel at around 95% of storage capacity, to ensure smooth supply for emergencies and essentials services, Upadhyaya said. “In addition, we have managed to provide fuel to the needy in coordination with local governments,” he said.
According to him, NOC is also starting a home delivery service for cooking gas from Wednesday. For this, they have divided consumers into 12 different categories.
These moves must not overshadow the consumer's right to fuel at market prices and the knock-on effect this ill have on other consumer essentials, said Madhav Timilsina, president of the Consumer Rights Investigation Forum.