NOC hikes fuel prices, common people to be hit

The cost of living of common man is going to be increased as the state oil monopoly increased the prices of petroleum products, except cooking gas, effective from today.

Nepal Oil Corporation (NOC) jacked up diesel and kerosene prices by Rs 1 per litre, and petrol by Rs 2 per litre making diesel and kerosene – mostly used by mass and goods transport and poor people – Rs 100 per litre and petrol Rs 125 per litre due to rise in petroleum products’ prices in the international market.

The corporation also hiked the aviation fuel price – that is going to make the airfare more costlier – as the price of domestic aviation fuel has increased by Rs 10 to Rs 130 per litre, and international (bonded) has been hiked by $50 per kilo litre to $1,300 per kilo litre, the technically insolvent corporation informed.

With the upward revision of the prices, the corporation’s monthly losses will come down to Rs 1 billion from Rs 1.15 billion, it added.

Though, the fuel price hike will help NOC minimise its monthly losses , it is going to make the common man poorer as the stronger dollar – due to weakening of Indian currency recently – coupled with rising food prices have already dragged more populace below the poverty line.

According to recent report of Asian Development Bank (ADB), a 20 per cent food price inflation would cause the poverty ratio to rise by over four percentage points, increasing the poor population by more than one million.
According to Central Statistic Bureau (CBS), a quarter of the total 26.62 million population is under the new poverty line meaning they earn less than Rs 54 per day on the basis of consumption.
The rising inflation will pull one million more down to 7.7 million population under the poverty line from the current around 6.7 million poor in the country thanks to the current trend of rising food prices that is above the average of developing Asia due to rising fuel prices.

The food price inflation has been much higher than nonfood inflation due to the correlation between oil price and those of chemicals and fertilizers used in agricultural production, transportation cost of agricultural products and use of energy in irrigation, the study added.
However, the state oil monopoly spared price hike in cooking gas fearing protests from the youth organisations. It has been incurring Rs 733 million monthly losses from its cooking gas business as it incurs Rs 523 loss in a gas cylinder, according to the NOC.

Though, consumer rights activists criticised government move, the government itself is busy making plans of establishing Price Stabilisation Fund and opening the petroleum business to the private sector to ensure the market competition but has been failing to walk the talk.

The consumers, who have already been suffering from double-digit inflation, will get no respite despite the central bank’s target of containing the inflation at eight per cent in the current fiscal year.

Airfare to go up

KATHMANDU: The hike on aviation fuel prices is going to force domestic airliners to raise airfares too. The increased fuel prices will be passed on to the passengers with a hike in fuel surcharges making the air travel more expensive before the festivals. Domestic airlines generally increase the fuel surcharge, if the NOC hikes fuel price up by above Rs 4. The Airlines Operators’ Association of Nepal (AOAN) meeting on Sunday is going to decide to hike the airfare. Though, NOC enjoys Rs 27 profit in a litre of domestic aviation fuel, it has hiked Rs 10 to Rs 130 per litre forcing the domestic airlines to hike airfare.

ALSO READ: http://businessjournalist.blogspot.com/2011/11/rising-food-price-hike-to-increase.html