Increase in price and consumption has made the country pay more than double the petroleum products import bill in last two fiscal years.
"Nepal has imported petroleum products worth Rs 32.77 billion worth in the first five months of the current fiscal year against Rs 15.18 billion import bill it paid in the same period of the fiscal year 2009-10," according to the central bank figures.
Nepal is becoming more dependent on petroleum products for meeting its energy requirement. The demand of all sorts of petroleum products like MS, HSD, SKO, ATF and LPG is about 1.2 million tonne per annum with annual increase of 20 per cent. Petroleum products constitute about 11 per cent of total energy consumed in the country, according to the Nepal Oil Corporation (NOC).
On one hand the price of petroleum products is looking up and on the other the consumption has also seen steep rise. The country has imported Rs 75.07 billion worth petroleum products in the fiscal year 2010-11 from a fiscal year ago's Rs 51.61 billion, according to the central bank figures. "The country had imported Rs 41.40 billion worth petroleum products in the fiscal year 2008-09."
"The state oil monopoly has imported and sold 159,286 metric tonnes (MT) of cooking gas in the fiscal year 2010-11, whereas it had imported and sold 141,171 MT of cooking gas in fiscal year 2009-10," according to the NOC figures, which revealed that the corporation sold 995,220 kl of petroleum products in the fiscal year 2010-11.
With increasing consumption and import, the country's total exports is not able to pay the petroleum products' bill forcing the government to either find alternative or decrease the import of petroleum products. The frequent shortage of the petroleum products and technically insolvent NOC have been eagerly waiting for the government’s long-term plan that could help maintain smooth supply and reduce the loans from the start oil monopoly by checking the leakages.
Indian Oil Corporation (IOC) is the sole exporter of all the petroleum products consumed in Nepal under a five-year contract agreement signed on March 31, 2007, which is going to be revised next month.
To meet the increasing demand, a memorandum of understanding between IOC and NOC has been reached to construct cross border Petroleum Product Pipeline from IOC's depot (Raxaul) to NOC's depot (Amlekhgunj) that is expected to decrease transportation cost.
Rising import bill
2009-10 — Rs 15.18 billion
2010-11 — Rs 23.67 billion
2011-12 — Rs 32.77 billion
(Figures for the first five months of the fiscal years. Source: Nepal Rastra Bank)