NOC reluctant to roll back fuel price hike

Published On: December 24, 2016 10:34 AM NPT By: Republica  | @RepublicaNepal

Why should consumers pay for govt inefficiency: Consumer rights activist

KATHMANDU, Dec 24: National Consumer Forum has criticized Nepal Oil Corporation (NOC) -- the state-owned oil monopoly -- for increasing petroleum prices. The increase -- effective from December 18 -- was against the spirit and standards of the Auto-pricing Mechanism set up to fix fuel prices.

“The agreement with the government clearly states that NOC cannot hike petroleum prices by more than 2 percent at a time. This time, the corporation hiked petrol priced by Rs 4.50 per liter,” Prem Lal Maharjan, president of the National Consumer Forum, said, accusing NOC of manipulating the Auto-pricing Mechanism’s rules. 

A parliamentary sub-committee Thursday directed NOC to roll back the price rise saying that NOC’s logic behind the price rise was redundant and invalid. While announcing the rise on Sunday, NOC had said fuel prices were much cheaper in Nepal than in India and this would spark an outflow of petroleum products from Nepal to India.

Maharjan, the consumer rights activist, says checking cross-border fuel smuggling was not NOC’s duty or responsibility but that of the government. “Instead of asking customs and related government agencies to check the petroleum smuggling at the border, NOC has unilaterally hiked prices,” he said, adding: “Why should consumers pay the price for government agencies’ inefficiencies?”

Maharjan also challenged NOC’s main stated reason for the hike -- the spike in fuel prices the international market. “The prices they were charging before Sunday had been fixed when crude oil was hovering at around $56 per barrel in the international market. Currently, crude oil prices are between $52 and $55,” he said, adding: “The price of petroleum products has to go down according to the international market price.”

Maharjan also asked why NOC’s prices are set in paisa when the smallest denomination currencies are Re 1 coins. 

NOC has, however, said it will not roll back the fuel-price hikes.

The decision was made to match the fuel prices across the border area and the price hike will also control smuggling of petroleum products, Gopal Khadka, Managing Director of NOC, said. According to him, NOC will implement its decision despite a directive from a parliamentary sub-committee under the Industry Commerce and Consumers Welfare Committee to roll back its decision.

The sub-committee Thursday directed NOC to withdraw its decision as it contravened the automatic-pricing mechanism. According to the sub-committee, the decision to increase prices will hit consumers as the price of the petroleum products are decreasing in the international market.

NOC on Sunday raised the price of petrol, diesel and kerosene by Rs 4.50 each, citing a rise in prices of crude oil in the global market. The price of petrol reached Rs 101.50, and diesel and kerosene Rs 77.50 after the increment. As per the new rates sent by IOC to NOC, NOC will make a profit of Rs 50.72 million from petrol, Rs 10.28 million from kerosene, Rs 20.76 million from aviation turbine fuel (duty-paid) and Rs 100.51 million from ATF (founded) this month.

According to Madhab Timilsina, a consumer rights activist, the decision to hike the price, despite making millions in profits was irresponsible. The decision will directly affect the market, he said, adding that NOC should be more responsible toward its consumers.

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