Likewise, they will need to pay around Rs 84 per liter for kerosene.[break]
Transporters and general consumers, however, will continue to get these fuels at the prevailing subsidized rate, which is Rs 76 per liter for both.
“Consumers and transporters will not be affected by the new decisions. Industries, missions, development projects and other commercial ventures, however, will need to pay break-even price (price at which the fuels are imported),” said NOC Spokesperson Mukunda Dhungel.
NOC´s latest decision is going to cost the industries and development projects dearly as it has straightaway increased their fuel cost by 25 percent in case of diesel. “This is an unpleasant decision. But we had no other choice,” Dhungel told Republica.
Members of NOC board said they took the policy decision mainly because the government did not allow them to raise the diesel and kerosene prices across the board. At the existing retail rates, the state-owned petroleum import monopolist is incurring a loss of Rs 18.91 on a liter of diesel and Rs 7.12 on a liter of kerosene.
As a result, these two products were estimated to inflict a monthly loss of Rs 1.04 billion and Rs 284.68 million respectively on the corporation in December.
“We pushed for a hike across the board in the price of these two products. However, the government did not give its consent. Hence, we had to resort to this policy,” said an NOC spokesperson.
The government refused to adjust the prices mainly referring to inflationary impact of a price-hike in diesel. Dhungel, however, refused to elaborate to what extent the new decision will help it cut the losses.
Meanwhile, industrialists and contractors handling development projects, flayed the decision. “Fuel cost makes for around 15 percent of the total cost for roads and major development projects. Rise in diesel price by a 25 percent will straightaway raise the total project cost by around 4 percent,” said Jaya Ram Lamichhane, president of Federation of Contractors Association of Nepal. “This will mainly hurt the ongoing projects for which the construction costs have already been quoted,” he added.
Industrialists too said the use of generators for power-supply is already making their costs go up. With such a sharp rise in diesel prices, they said they will simply fail to compete in both domestic and international markets.
Moreover, sources at the corporation said the decision does not take into account the possibility of leakages. “Such massive difference in the prices will most probably spur price anomaly and also shortage in the market as petroleum dealers to whom fuel is supplied at lower rates for retail sales might funnel the supply to industries and projects,” said the source.
Dhungel too admitted of such a possibility. However, he said the corporation is stepping up market inspection in partnership with the Department of Commerce from Sunday to check such anomaly. “We will make sure that supplies made to dealers are retailed to general consumers,” he stated.
Amid rise in losses, NOC has failed to import petroleum products in sufficient quantity over the last 10 days.
This has already caused scarcity of diesel in the market. Contractors complained of shortage affecting construction projects including national priority projects like Sikta Irrigation, Mid-Hills Highway, Melamchi Drinking Water Project, Tama Koshi Hydropower and Chameliya, among others.
NOC record shows it is presently distributing just around 2,000 kiloliters (KL) of diesel a day against the demand of 3,000 KL in the country.
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