If the mechanism is implemented, consumers could face a hike in the prices of major petroleum products after Dashain and Tihar festivals.
“We will soon adopt automatic pricing policy and mechanism in the petroleum sector, and will start adjusting prices in line with the international trend as soon as the festive season ends,” said Minister for Commerce and Supplies Rajendra Mahato.
The plan is still under discussion. It is also yet to be approved by all the parties in the government. Despite recognizing the importance of APM, political leaders—have always shied away from its implementation because of the resistance from the parties in the opposition.
Officials, however, said they are left with no other choice.
The ministry has pushed for the enforcement of mechanism, citing huge losses the country suffered over the last four years and subsequent fuel crisis that gripped the nation. It argues that APM is necessary to avoid re-emergence of similar situation.
Owing to poor commitment of the government and petty political interests of parties in the opposition, Nepal has suffered a net loss of over Rs 20 billion in petroleum trade so far. When the state-owned Nepal failed to pay the dues to the Indian Oil Corporation, people were forced to queue up at pet—ol pumps for days to get a few liters of the fuel in the past.
“If the current price trend stays for long and parties continue to act insensibly, nobody will be able to prevent another petroleum crisis from arising soon. We must let go the state control on fuel price,” said Mahato, trying to convince the lawmakers at the Public Accounts Committee of the parliament.
Earlier, the government had principally agreed to adjust the prices in line with the import price trend after the oil prices dropped from $146 a barrel in July 2008 to $36 a barrel in January 2009.
But the decision came without adopting a proper ´pricing formula´ and ´price band´ -- something experts think is very necessary to end the state monopoly and induct private players into petroleum business.
As a result, Nepal Oil Corporation (NOC) complied with the decision till the import prices receded. Once the prices started to go up, it stopped adjusting the prices and again turned to the government to take the decision.
“We had authority to slash prices only. When the import prices rally, the government keeps mum to our hike proposal. Hiking petroleum prices is still a political decision,” a senior NOC official told myrepublica.com.
However, Mahato said the government was serious about enforcing the APM this time round.
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