Friday, July 27, 2012

Government continues VAT waiver on poor men's fuel

The cabinet meeting today morning decided to continue with the waiver of Value Added Tax (VAT) on kerosene — the poor man's fuel — for the current fiscal year too.
Kerosene is the only petroleum product in which VAT has been waived for a long period of time and it attracts around Re 1 per litre customs only.
"It is only the continuation of the VAT waiver and will not affect the current price," said acting managing director of Nepal Oil Corporation (NOC) Suresh Kumar Agrawal.
On June 19, NOC had jacked up the price of kerosene to Rs 93 per litre from Rs 89 per litre. The corporation has been making a profit of Rs 12.80 per litre of kerosene, according to the latest price list sent by its sole petroleum supplier Indian Oil Corporation.
Had the government decided to waive VAT on cooking gas and diesel too, it would have made the life of the common people cheaper, said consumer rights activist Jyoti Baniya.
"Waiving VAT on diesel will bring transportation costs down pulling the prices of commodities down," he said, adding that the higher cost of transportation has fuelled inflation to a near double digit.
Earlier, after a lot of complaints that petrol pumps had been mixing cheaper kerosene in diesel to make profits, NOC had on November 1, 2008, made the price of diesel and kerosene equal to control adulteration. After the price equalisation, the demand for kerosene had plunged dramatically.
The consumption of kerosene has seen a continuous drop because of equal pricing between diesel and kerosene and also due to increasing use of Liquefied Petroleum Gas (LPG) — popularly known as cooking gas — lately.
The import of kerosene has plunged by more than eight times in the last nine years to 43,399 kilolitres (kl) in 2010-11 from 351,696 kl in 2002-03, due to the increasing remittance inflow that has made cooking gas affordable for many and due to the change in living standards.
Despite the drop in imports and consumption, the price of kerosene has seen a hike of around 50 per cent in a decade from Rs 68 per litre in 2002-03 to Rs 93 per litre in 2012-13.

Price hike
2011-06-11 — Rs 68.50
2011-07-10 — Rs 73.50
2011-08-26 — Rs 75
2011-10-10 — Rs 76
2012-01-18 — Rs 85
2012-01-26 — Rs 81
2012-02-24 — Rs 85
2012-03-26 — Rs 89
2012-06-19 — Rs 93
(Source: Nepal Oil Corporation)

Import of SKO (Kerosene)
2002-03 — 351,696
2003-04 — 313,127 kilolitres
2004-05 — 223,463 kilolitres
2005-06 — 225,007 kilolitres
2006-07 — 192,576 kilolitres
2007-08 — 152,168 kilolitres
2008-09 — 77,799 kilolitres
2009-10 — 52,714 kilolitres
2010-11 — 43,399 kilolitres
  (Source: Nepal Oil Corporation)

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