KATHMANDU, May 23: Nepal Oil Corporation (NOC) incurred a loss of Rs 47 billion in the last 10 months. The corporation reports that the loss has been caused by the persistent rise in the price of petroleum products in the international market.
According to the corporation, it has been selling fuels at a price lower than the buying price which has caused it to continuously bear losses. The corporation discloses to have suffered a total loss of Rs 47 billion between July-August 2021 and April-May 2022. “Not trading the fuels on their par value has culminated in this huge loss,” said Acting Deputy Executive Director of NOC, Nagendra Sah.
NOC buys fuel from the Indian Oil Corporation (IOC). The corporation makes payments to the IOC every 15 days. Nepal buys fuels worth Rs 20 billion from IOC each month. The corporation mentions that due to losses incurred in the sales of fuel, the money collected from the daily turnover has not been sufficient to make payments. With the reserve fund emptied, the corporation is having a difficult time making payments to IOC for the purchase of the fuels. This impacts the supply of fuels in the domestic market.
The heat of the rising prices in the international market triggered by the war between Russia and Ukraine has also been felt in Nepal’s domestic market. In addition to this, the government has levied high taxes on fuels imported from the IOC. This, too, has helped make petroleum products expensive. Since the corporation incurred a loss of around Rs 4.480 billion on the prices previously described by the IOC, the price of petroleum products had to be increased again.
The price of petroleum products has been increased after the corporation incurred a loss of Rs 22.94 per liter in petrol, Rs 35.33 per liter in diesel and Rs. 1050 per cylinder in cooking gas. The corporation has increased the price of petroleum products by Rs 10 per liter in the recent week. It increased the price after IOC gave a revised price list to the corporation detailing higher prices for petroleum products. Increases in prices for fuels have led to an increase in prices of other consumer goods.
Experts suggest that to minimize the loss that the Nepal Oil Corporation has had to incur and provide relief to the consumers, the government will have to reduce the tax that it imposes on fuels. Former Executive Director of the corporation, Surendra Poudel says that during the COVID-19 pandemic when the fuels were purchased at cheaper prices, the government, at the corporation’s request, had increased the infrastructure tax and customs duty on the fuels by Rs 15. “Now that the prices (of fuels) have become expensive, the government should reduce the tax,” says Poudel.
The Indian government announced a cut in the excise duty on petrol and diesel after the prices of oil elevated in India. The reduction of the excise duty has led to a decrease in the price of petrol by INR 9.5 per liter and by INR 7 per liter in the price of diesel.