Govt slashes petroleum prices

New prices

Petrol: Rs 77.50 per liter

Diesel and kerosene: Rs 57.50 per liter

Cooking gas: 1,125 per cylinder

KATHMANDU, Feb 2: The government has slashed the prices of major petroleum products between Rs 2 to Rs 5 per liter in the domestic market. The price of cooking gas has also been lowered by Rs 25 per cylinder.

A meeting of the Nepal Oil Corporation (NOC) board Monday announced a reduction in the price of petrol by Rs 3 to Rs 77 per liter. It also cut the price of diesel and kerosene by Rs 2 to Rs 57 per liter and aviation fuel by Rs 5 to Rs 80 per liter.

Likewise, the price of cooking gas has been slashed to Rs 1,125 per cylinder for the hill districts including Kathmandu Valley. For Tarai districts, it has been fixed at Rs 1,105 per cylinder. [break]

The price of aviation fuel for international flights has been lowered to US$ 900 per kiloliter from US$ 1,000.

“The new rates will come into effect from Tuesday,” said Purushottam Ojha, commerce secretary, adding that the retail prices will be 50 paisa higher than NOC rates as the government will continue to impose a pollution tax on petrol, diesel and kerosene.

This is the fifth instance of price cut announced over the last three months, said NOC officials, who stated that the prices have been lowered in line with the international trend. Compared to US$ 147 a barrel in July 2008, oil prices in the international market have dipped to US$ 42 per barrel at present.

NOC Executive Director Digambhar Jha said that oil prices in Nepal have been kept higher than in the bordering Indian markets in order to prevent cross-border smuggling and leakages. Petrol and diesel are priced at about Rs 69 and Rs 53 respectively on the other side of the border.

Despite downward adjustment in prices, NOC will still continue to make a profit of Rs 840 million in the month of February.

However, Jha stated that the corporation would use Rs 550 million of this profit to service its debts. “We have set aside this amount in our new pricing structure. So, our net profit will be Rs 290 million this month,” he said.

Unveiling the new pricing structure to myrepublica.com, Jha said that it has set aside a profit of Rs 15.85 on a liter of petrol, Rs 6.50 per liter of diesel and kerosene, Rs 17.25 on aviation fuel and Rs 45 on a cylinder of gas for repaying its loans.

“So, our actual profit on oil stands at Rs 1.49 per liter of petrol, Rs 2.92 on diesel, Rs 9 on kerosene, Rs 16.40 on aviation fuel and Rs 26.92 on a cylinder of cooking gas,” he stated.

Jha elaborated that the debt-servicing amount has been set aside in the pricing mechanism because the corporation has to repay loans amounting to Rs 14.25 billion to the government and commercial banks.

NOC data shows it owes Rs 8.92 billion to the government, Rs 1.80 to the commercial banks and Rs 4.3 billion to financial institutions, including Citizens Investment Trust and Employees Provident Fund.

In November, 2008, it had loans and outstanding dues worth Rs 15.96 billion emanating from losses incurred over the last four years. “From the profits earned over the last two months, we paid back Rs 500 million to the commercial banks and about Rs 1.24 billion to the government,” said the NOC official.

The corporation also settled its outstanding accounts with the Indian Oil Corporation (IOC) during the period.

milan@myrepublica.com