Ministry of Commerce and Supplies (MoCS) has finalized a relief package to extend a domestic fuel subsidy of Rs 100 per month per family. "It is being forwarded to the Cabinet this week for approval," said a senior Ministry source. [break]
Going by the relief package disclosed to myrepublica.com, the government will be providing a subsidy of Rs 100 per cylinder of cooking gas per family per month. Likewise, people using kerosene for cooking will also get a subsidy of Rs 10 per liter. Such an incentive will be pledged for a maximum of 10 liters to a family per month.
The relief package will be extended throughout the country for consumers of cooking gas (LPG). However, subsidy on kerosene will be extended to low income groups like students and families living on rent, among others.
On government instruction, Nepal Oil Corporation (NOC) -- the state-owned petroleum import monopoly -- has already prepared a mechanism for distribution of the state-pledged relief.
"It will be distributed through a cash refund mechanism, under which consumers will be handed over the subsidy amount in the form of post-purchase cash refunds," said the source. He elaborated that ward offices in the cities and urban centers, local bodies in the districts, and colleges also will be mobilized for the purpose.
Moreover, sources said the MoCS was also pushing the government to deregulate the price of cooking gas, thereby ending administered pricing in the LPG business, subsequent to the endorsement of relief package.
"This is being pushed in order to free the State from the burden of additional liability, which might emanate once the international prices start to rise in future," said the source. In the past, LPG -- despite being the major household fuel of well-off urban families -- had generated as much as Rs 500 million in financial liability a month to the State.
Most importantly, opening of LPG prices will also prevent misuse of the state support by the commercial consumers like hotels, restaurants, factories and automotive sector.
According to NOC´s claim, some 30 percent of the LP gas sold in the country is consumed by commercial ventures. "So, opening of the prices after cushioning the needy groups with subsidy will prevent misuse of state subsidy -- something which went on to a large extent in the past," said the source.
milan@myrepublica.com
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