Supplies ministry remains undecided on proposal on raising daily supply quota

KATHMANDU, Sept 10: Gold is in short supply as the major festival season dawns nearer, jewelers say.

The demand for the yellow metal generally rises in September, ahead of the Teej festival, which is celebrated this Wednesday, and Dashain-Tihar. But jewelers say they were facing difficulty to meet the festive demand.

"Gold demand rises during festive seasons every year. This year we are facing difficulty to meet the demand as there is shortage of yellow metal in the market," a jeweler told Republica.

Gold dealers say the situation arose as Nepal Rastra bank (NRB) did not increase gold quota supply for this year. "Normal supply quota is 20 kilograms per day. However, we need at least 30 to 35 kilograms of gold per day during festive seasons,” said Mani Ratna Shakya, immediate past president of Federation of Nepal Gold and Silver Dealers' Associations.

In the past years, the central bank used to raise daily gold supply quota by 5 kg for the festive season. This year, however, it has not raised gold supply to the market. The dealers have already made written request to NRB. But the central bank has not responded to the dealers yet.

"Gold price fell to Rs 54,000 per tola (11.664 grams) about a month ago. Many people but gold at that time, taking advantage of price fall," Shakya said, adding: "Now, we are facing problem in meeting the demand." He also added that the NRB should raise supply quota permanently given the rise in the number of jewelers and gold dealers in recent years.

Meanwhile, the shortage of gold has hit consumers hard. They complain that they have to pay additional amount on top of the price fixed by the federation due to shortage of gold.

Gold was traded at Rs 57,800 per tola in the domestic market on Sunday.

SUPPLIES MINISTRY DELAYING DECISION ON QUOTA HIKE

NRB distributes gold to dealers through commercial banks. But it cannot raise supply quota without taking consent of the Ministry of Industry, Commerce and Supplies.

After studying request of gold dealers, NRB had submitted a proposal to increase gold supply quota for the festive season to the ministry. However, the ministry has not responded to the proposal yet.

"The ministry earlier pointed out Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) meeting in Nepal for the delay in giving go-ahead to the central bank's proposal of increasing gold supply quota," Shaky added.

The NRB had sent the proposal to the ministry about one and half months ago. But the ministry has neither approved the proposal, nor rejected it.

Rabi Shankar Saiju, the spokesperson for the ministry, told Republica that the ministry was studying the market before taking any decision on the NRB's proposal. “We are currently studying the situation,” he said, adding: “We will respond to the proposal as soon as our study is complete."

Saiju added that it was necessary to study factors like foreign exchange rate and international gold price, among others, before taking any decision on gold supply.

'BIG DEALERS HAVE FORMED A CARTEL'

While the indifference of the ministry toward the NRB's proposal has created shortage of gold in the market, smalltime dealers allege that 'big' dealers associated with the federation have formed a cartel to distribute gold provided by commercial banks. "We are not getting gold as we do not have access to 'powerful people'. That is why we have to buy gold from illegal channel at higher prices," a jeweler said, preferring anonymity. "This leaves us with no option but to charge consumers higher price."

 
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