NOC reluctant to cut fuel prices

Published On: May 22, 2017 01:00 AM NPT By: Republica  | @RepublicaNepal

KATHMANDU, May 22: Though price of petroleum products has fallen, the Nepal Oil Corporation (NOC) seems to be in no mood to cut down its price in the domestic market.

With the fall in crude prices in the international market, Indian Oil Corporation (IOC) -- the sole supplier of petroleum products to Nepal - last week reduced price of petroleum products supplied to Nepal. The Indian supplier reduce price of petrol and diesel by IRs 2.16 and IRs 2.10 per liter, respectively. As per the reduced rate, NOC will make profit of Rs 7.53 and Rs 2.47 per liter, respectively, in diesel and petrol.

Sitaram Pokharel, the spokesperson for NOC, said that the state-owned petroleum monopolist has left the price unchanged to stop smuggling of petroleum products to Nepal. “Petrol is already cheaper in Nepal, compared to India. Further drop in its price could encourage smuggling to India,” he said. “We plan to use the accumulated profit to improve our infrastructure.”

Petrol is being retailed at IRs 68.82 per liter in Bihar
NOC is selling petrol at Rs 101.50 per liter, and diesel and kerosene at Rs 77.50 per liter. Similarly, it is selling aviation turbine fuel (duty-paid) at Rs 86 per liter and liquefied petroleum gas (LPG) at Rs 1,375 per cylinder (14.2 kg). 

NOC is making profit on petrol, kerosene, diesel and aviation turbine fuel, while is suffering loss on LPG. The corporation, which had made profit of Rs 70 million between mid-April and mid-May, stands to make profit of Rs 200 million between mid-May and mid-June as per the rates forwarded by IOC.

The state-owned petroleum monopolist had introduced automatic pricing mechanism in 2015 under which it had promised to make adjustment to price of petroleum products as per the price rate forwarded by IOC. While enforcing the mechanism, NOC had said that it would make adjustment to price of petroleum products every fortnight as per the rates forwarded by IOC. 

Jyoti Baniya, a consumer right activist, said NOC, being a public service utility, should not be focused on profit-making only. “NOC only raises price of petrol products whenever price increases in the international market. It should reduce price in the domestic market if prices fall in the international market,” Baniya said.

He also said that the apathy of the NOC and Ministry of Supplies (MoS) to enforce the auto pricing mechanism is forcing consumers to pay more for fuel.

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