NOC reluctant to cut fuel prices

Published On: June 5, 2017 12:20 AM NPT By: Ashim Neupane  | @ashimnep

The petroleum monopolist is making profit on every product it sells
KATHMANDU, June 5: Despite making profit in liquefied petroleum (LP) gas after nearly 18 months, the Nepal Oil Corporation (NOC) has said that was not bringing down price in the domestic market anytime soon.

As per the new rate send by Indian Oil Corporation (IOC) -- the sole supplier of petroleum products to Nepal -- on June 1, NOC will make profit of almost Rs 30 per cylinder (14.2 kg). It is currently selling LP gas at Rs 1,375 per cylinder. NOC will make profit of Rs 40.5 million from LP gas in the first two weeks of June.

NOC is now making profit on every petroleum product that has been selling. It is making profit of Rs 5.50 per liter on petrol, Rs 1.2 on diesel, Rs 18 on Kerosene, Rs 11 on aviation turbine fuel for domestic airlines and Rs 18 on ATF for international airlines.

In the new rates for the first two weeks of June, IOC has increased price of petrol and diesel by Rs 2.16 and Rs 1.27, respectively. Despite the price rise, NOC is still making profit on these two products. 

The state-owned petroleum monopolist is currently selling petrol at Rs 101.50 per liter, and diesel and kerosene at Rs 77.50 per liter each. Similarly, it is selling aviation ATF (for domestic airlines) at Rs 86 per liter. It will profit of more than Rs 600 million in the month of Jestha (mid-May to mid-June) as per the price rates forwarded by IOC.

Though NOC introduced automatic pricing mechanism in 2015, promising to make adjustment to prices of petroleum products in line with price rates forwarded by IOC, it has not happened in recent months. 

Sitaram Pokhrel, the spokesperson for NOC, said that the corporation has not made any plan to reduce price of petroleum products. “We cannot reduce price now because of the election code of conduct. Instead, we have planned to upgrade our infrastructure from the accumulated profit,” Pokhrel said. “As the price of petroleum products is already cheaper in Nepal compared to India, further drop in price might trigger smuggling to India.”

Meanwhile, Jyoti Baniya, a consumer right activist, said that NOC was making huge profit by overcharging consumers. “As NOC is not a profit-making entity, it should immediately implement automatic price adjustment mechanism and give some relief to consumers,” he added. He also claimed that the election code of conduct doesn't prohibit NOC from reducing prices. “NOC never misses the opportunity to increase price, citing the automatic pricing mechanism. But when it comes to reducing price it acts otherwise,” Baniya added.

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