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 kilolitres
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)

Revenue mobilisation stares at shortfall

Revenue mobilisation has still been staring at shortfall by the end of third quarter of the current fiscal year due to lackluster performance of Nepal Oil Corporation and Nepal Electricity Authority coupled with drop in vehicle imports and registration.
"However, the shortfall has come down to Rs 2.22 billion by the end of nine months of the current fiscal year from a month earlier's Rs 3.99 billion," said finance secretary Krishnahari Baskota.
The government has been able to mobilise Rs 172.90 billion revenue by the end of Chaitra (mid-April). "The revenue mobilisation must go above 20 per cent to meet the target of the current fiscal year," he said, adding that the revenue mobilisation has seen, however, only 18.1 per cent growth.
On the monthly basis, the ninth month has exceeded the target. "The target for Chaitra was Rs 25.86 billion but we have been able to collect Rs 27.62 billion," the finance secretary said, adding that the customs, VAT and Income tax exceeded the target but excise, registration, vehicle tax and non-tax could not meet the target hitting the government revenue target.
As usual the VAT tops the revenue mobilisation with Rs 52.92 billion followed by Income tax with Rs 36.84 billion and customs with Rs 29.93 billion.
Similarly, the government development spending has also not been improved as it stood at 34.1 per cent to Rs 24.78 billion on cash basis of the total capital budget of Rs 72.61 billion.

Aviation fuel surcharge, taxi fare hike

No sooner than the Airlines Operators Association of Nepal (AOAN) hiked fuel surcharge from today, the government is hiking taxi fare effective from tomorrow.
Though the Department of Transport Management had recommended Ministry of Labour and Transport Management to raise taxi fare by 18 per cent, the ministry is increasing taxi fare by 17 per cent effective from tomorrow, according to Department that said that mounting pressure from meter taxi operators due to rising petroleum prices and other maintenance costs forced the government to hike taxi fare.
The passengers will now have to pay Rs 27 per km. Earlierr it was Rs 23 per km with flag-down fare of Rs 10. The flag-down fare has not been hiked," the department said, adding that fare per 200 meter has increased to Rs 5.4 from earlier Rs 4.6. The government had last hiked taxi fare last March 26.
It has also raised tourist taxi fare to Rs 370 from current Rs 315 for 5 km distance apart from that taxi drivers are allowed to charge an additional Rs 53 per extra km.
Similarly, Airlines Operators Association of Nepal (AOAN) decided to hike fuel surcharge effective from Monday, to cope up with the hike in the price of Aviation Turbine Fuel (ATF).
Nepal Oil Corporation has increased Rs 10 per litre from Rs 90 for domestic aviation fuel. AOAN has also expressed its disappointment on NOC''s decision on repeated price hike of ATF that will directly hurt its consumers. The board meeting of NOC on May 7 has decided to increase the price of ATF to Rs 100 per litre. Similarly, ATF (international) has increased to $1275 from $1075 on a kilolitre. With price hike, the state oil monopoly has made a profit of Rs 17.90 on a litre of ATF (domestic). According to member of Nepal Tourism Year 2011 working committee Dhurba Narayan Shrestha, there is hike of Rs 1,000 in domestic and Rs 3,000 in International flights'' fares after addition of fuel surcharge. However, among the 26 international flights Qatar Air is going to make an airfare hike from July 15 only.
Domestic Airlines earlier has increased its fuel surcharge by Rs 180 with rise in the ATF prices by Rs 10 per litre. As per the domestic airlines operators the surcharge has been revised only after a huge hike in the ATF.
However, domestic carriers have increased fuel surcharge by 20 per cent to Rs 775 per ticket from yesterday.
Domestic carriers had not revised fuel surcharge since March when NOC raised ATF price by Rs 10 per liter.
According to regulations, airlines can increase fuel surcharge when ATF price is increased by more than Rs 4 per liter but they can revise airfare only in two years.
Civil Aviation Authority of Nepal (CAAN) reviews airfare every two years on the basis of inflation rate, fuel price and maintenance cost.

NOC in red, staffers in pink

Though the state-oil monopoly has been in the red due to rising petroleum prices, the Nepal Oil Corporation (NOC) staffers get 60 litres of kerosene for free per month, so do around 200 leaders of political parties. And that too at the cost of tax-payers’ hard earned money. Consumer rights activist Jyoti Baniya said the provision of doling out freebies to the staff and leaders is bleeding the NOC blue.
NOC has around 700 staffers, according to the corporation. Currently, a litre of kerosene costs Rs 68.50, which makes the total monthly cost of 60 litres of kerosene for the entire staff Rs 2.88 million, while the annual loss comes to around Rs 34.52 million. “The provision should be scrapped at the earliest,” Baniya added.
The consumer rights activists also blamed the corporation for providing fuel to the leaders. “Top leaders of political parties and former ministers have been getting petroleum products regularly from the corporation for free,” another rights activist said, advising NOC to cut freebies before claiming the mounting losses.
The NOC has added Rs 49.89 for a cylinder of cooking gas under transportation, insurance, compensation and technical loss, apart from Rs 105.81 for transportation and insurance cost.
Besides, the NOC has revealed technical loss of Re 0.86 on petrol, Re 0.54 on diesel, Re 0.47 on kerosene, Re 0.57 on Air Turbine Fuel and Rs 1.39 on cooking gas.
The President of Gas Dealers’ Federation of Nepal, Gyaneshwor Aryal has sought a probe into the pricing mechanism, adding that NOC can reduce its losses, if it shows readiness to scrap the unnecessary provisions and administrative costs that are irrelevant.
NOC incurred Rs 511.4 million as administrative cost last fiscal, according to Digambar Jha, managing director at the corporation.
The NOC has said that it will incur a los of Rs 1.77 in April according to the new rate list it received from its supplier Indian Oil Corporation. It has imported Rs 7.62 billion worth 114,451 kilolitre (KL) petrolem products in March. "It sold 112,893 kl petroleum products and incurred Rs 1.40 billion loss in March," it said.

Rising international price to push domestic petroleum products price up

Consumers are going to feel the heat of increasing international petroleum prices as loss making state-oil monopoly has no alternative to hike the prices, sooner or later.
"Even if the government lends us, there is no option to hike the price of petroleum products," said a higher official from Nepal Oil Corporation (NOC).
"If government lends, it could help smooth supply as we can pay supplier on time," he said, adding that price hike will only reduce the rising loss that is going up to Rs 1.77 billion from this month against the earlier estimate of Rs 1.55 billion loss.
According to the NOC, it will incur a loss of Rs 1.77 billion monthly based on a new price list that the state-oil monopoly received today from its sole supplier Indian Oil Corporation (IOC).
"Except in Air Turbine Fuel (ATF), NOC will incur losses in all other petroleum products including cooking gas," said the officials. "The state-oil monopoly's losses seem only increasing due to international price that has been on raise since last couple of months."
It was incurring a loss of Rs 1.55 billion till March and Rs 1.33 billion till February.
According to the new rate of today, the NOC will incur Rs 288.89 loss in a cylinder of cooking gas, Rs 3.75 loss per litre petrol, Rs 20.96 loss per litre diesel and Rs 11.25 loss per litre kerosene.
The sole supplier IOC sends new rate every first and 16th day according to the gregorian calender. On the 16th of every english month, IOC sends the prices petrol, diesel, kerosene, whereas on the first, it sends the rate of all the petroleum products including cooking gas and ATF, on which NOC will still earn Rs 9.20 profit per litre this month too.
The state-oil monopoly has been, however, critised by the consumers for being importer, supplier and regulator of the petroleum sector.
However, consumer rights activists demanded to end the monopoly of NOC arguing that competition will help reduce prices and quality of service.
"The mismanagement of NOC is responsible for the rising losses," Premlal Maharjan, president of Consumers Network for Consumers' Rights, said, demanding to form a separate Petroleum Board to regulat the petroleum sector.
"Political parties are also to blame for the losses," he said, adding that the partis should not politicise it and price has to be adjusted either based on international price or Indian market price.
"The upward or downward price adjustment according to the international price or Indian market price can salvage the state oil-monopoly and the consumers both," he added.

Country gets new gas industry

At a time when investors are complaining about lack of investment climate, the country is ready with the 27th cooking gas industry — Sugam Gas Industry.

"Sugam Gas Industry -- with Rs 250 million investment -- is planning to distribute its gas in the market from November 1," said the chairman of the company Shiva Prasad Ghimire.
"Out of the total investment Rs 120 million is loan from Himalayan Bank Ltd," he added.
Learning the lessons from the past strikes and high-way bandh, the industry is located at the distance of 14-km at Khanikhola, Dhading from Thankot, the entry point of the Kathmandy Valley. "The industry targets to serve the Valley and surrounding areas," he said.
"If operated smoothly according to its capacity, the industry will contribute Rs 30 million to the government coffer in a year," according to Ghimire.
The country has imported 141,171 metric tonnes of LPG -- popularly known as cooking gas -- in the fiscal year 2009-10, whereas it had imported 115813 metric tonne of gas In the fiscal year 2008-09, according to the Nepal Oil Corporation (NOC).
There are around five gas industries still in pipeline as the demand of cooking gas in increasing.
With increasing population, the Valley consumes 1,00,000 cylinder of gas in a month and out of the total consumption, around 60 per cent is consumed in the Valley alone, he said, adding that the industry plans to provide the Valleyiets with regular supply of cooking gas in safe cylinder from its industry that has the latest technology.
"We have given much priority to security -- from before filling the gas cylinders till it reaches to the consumers' household -- and regular supply, Ghimire said, adding that the industry has also insured the largest amount of Rs 1.5 million for the consumers in case of gas cylinder related accident.
The industry with the storage capacity of 1,650 metric tonne -- the largest storage capacity among the gas industries -- including cylinders is spread in 20-ropani area of land, it claims. "The industry that aims to serve around 25 per cent of the market -- employes 100 people directly and around 500 indirectly."

Bill for private players in petroleum business soon

No bonus for NOC staffer

Secretary at the Ministry of Supplies Purushottam Ojha said that the ministry will reintroduce a Bill to involve private sector in the petroleum business in the Parliament soon. Parliament had rejected a similar proposal about three years ago. "The Bill will give a passage to the private players to enter the petro-products business," he added.

"Private sector's participation in the petroleum supply and distribution could help ease the tension between consumers and NOC as every second month the NOC staffers block the petroleum products supply to pressurise the management to hike the price of petroleum products," Ojha said. The country every year imports the petroleum products worth Rs 40 billion and the import is increasing every year as the number of vehicles are increasing.

Speaking about the recent controversy over bonus plan, Ojha, who is also the chairman of Nepal Oil Corporation (NOC), said that the corporation will not distribute bonus to staff.

"The Commission for the Investigation of the Abuse of Authority (CIAA) and the government directed the state-oil monopoly not to distribute bonus," he said.

"NOC board, ministry concerned, and the Finance Ministry have to give permission to distribute bonus," he said adding that,"The bonus issue is not being considered at the moment."

The state oil-monopoly had, earlier, decided to distribute about Rs 200 million in bonus to its employees from the profits made in 2008-09. But the corporation has an accumulated loss of over Rs 11 billion. "The management and staff both know that the financial situation of the corporation is not worth bonus-taking," Ojha added.

NOC has been increasing the prices of the petroleum products saying it is in loss. CIAA has directed NOC not to enforce its board decision of distribution of bonus to its staff as it has been incurring accumulated loss.

The NOC staff earlier stopped the distribution of petroleum products for two days after the board revoked the decision of bonus.

Though, the agitating unions claimed that the management was trying to divert public attention from their main demand by focusing only on the bonus issue.

They said their major concern was regarding automation and re-calibration of the depots which will reduce the time and cost involved in fuel supply.

Though their demands were related to improvement of NOC also, the consumers bore the burnt of their strike. "If private players could be introduced the consumers will benefit as they will have an alternative to the oil monopoly," Ojha added.

However, it takes a huge investment to have a parallel structure like NOC to supply the petroleum products.

Petroleum prices hiked again !

Citing the price hike in India, Nepal Oil Corporation (NOC) has, finally, hiked the prices of petroleum products. The state oil monopoly hiked petrol price by Rs 3 per litre, and Kerosene and diesel by Rs 2.50 per litre each. But it has not hiked the prices of cooking gas and aviation fuel.
The NOC has revised the prices of petroleum products upwards after it received the new price list from IOC on July 1. "Had the NOC not increased the price, it could have been incurring a loss of Rs 100 million per month, according to the new list," he added.
"With the price hike, price of petrol will be Rs 85 per litre and kerosene and diesel will cost Rs 65.50 per litre each," said Mukunda Dhungel, NOC spokesperson. "After the price hike, NOC will earn Rs 73.9 million in profit."
"The corporation was incurring a loss of Rs 1.16 billion in the current financial year," Dhungel said.
Earlier, the corporation had hiked petrol price to Rs 82 per litre and diesel — the poor man's fuel — and kerosene prices were hiked to Rs 62.50 per litre each. Then also, it had not changed the price of cooking gas. LPG costs Rs 1,250 per cylinder.
On every 1st and 15th of the English calendar month, NOC receives the new rate of diesel, kerosene and petrol from its supplier IOC. The rate of cooking gas is revised on the first of every English month according to the international market price.
According to the increased price in India since June 25, petrol and diesel were cheaper in Nepal by Rs 4.83 and Rs 2.10 per litre. "We had no option to hike to stop the back flow of the petroleum products due to open borders," Dhungel said.
For last one week, there has been a short supply of petroleum products. Though, Dhungel claims that the supply has been normalised, the supply crunch has still been experienced by the people. However, Consumer groups claim that the shortage has been created by NOC to raise the prices of petroleum products after the government turned down its loan request for Rs 1 billion.
But in the last cabinet meeting of the Madhav Kumar Nepal government, it was decided to give Rs 800 million to NOC so that it can pay its dues and supplies in the country could again become normal.
"The deep-rooted corruption in NOC created an artificial scarcity of petroleum products," said Jyoti Baniya, general secretary of the Consumers Rights Protection Forum(CRPF).
"The monopoly of NOC in petroleum products supply is repeatedly making the consumers suffer," a petroleum dealer said adding that the private sector should also be allowed to import petroleum products to create a fair market environment.

Fuel shortage to continue for a couple of days

The Valleyites will have to suffer more as the state-oil monoploy claims that the petroleum shortage will ease in a couple of days. The petrol pumps in the Valley started running dry since since last couple of days as Nepal Oil Corportation (NOC) failed to supply enough petroleum products.
"The shortage will ease from Thursday," said NOC spokesperson Mukunda Dhungel. "The dealers have loaded 48,000 litres of petrol, 36,000 litres of diesel and 2,400 litre of kerosene from Amlekhagunj depot today that is expected to reach the valley the day after."
The dealers have also loaded 2,15,000 litre of petrol and 3,57,000 litre of diesel from Thankot depot today.
However, most of the Valley petrol pumps today also wear a deserted look and some -- like Sajha, Nepal Police and Nepal Army petrol pumps -- had a serpentine queue throughout the day. "Today 68,000 litre of petrol, 1,80,000 litre of diesel and 83,000 litre kerosene reached the Thankot depot that is expected to ease the shortage," said the the state oil monopoly that has estimated the daily need of Kathmandu Valley at 3,00,00 litre of petrol and 4,00,000 litre to 4,50,000 litre of diesel in normal condition.
The NOC has failed to load the required amount of petroleum products from June 2, accepted Dhungel. "Our stock has also depleted by 9,000 kilo litre (KL) since June 2," he said adding that the stock on June 2 was 42,000KL and today it has dropped to 33,000KL now.
However, the pressure has increased since last four days as the NOC publically accepted that it cannot supply the required amount of the petroleum products. "We have asked for Rs 1 billion from the finance ministry to pay our supplier -- as we are in loss -- but the ministry turned down our request," the NOC said.
However consumer groups are not ready to believe that the NOC is in loss. "The international price has come down by half to around $70 per barrel from last year's $140 and NOC has been hiking the prices of petroleum products time and again," said Jyoti Baniya, general secretary of Consumers' Rights Protection Forum (CRPF). "Its yet another ploy to hike the price," he said adding that the monopoly market and deep-rooted corruption in the NOC is responsible for the accumulative losses. "The government must interfere," he suggested.
In March, NOC has hiked petrol, diesel and kerosene prices to Rs 80 per litre and Rs 61 per litre. On every 1st and 15th of the English calender month, NOC receives the new rate of petroleum products from its supplier Indian Oil Corporation (IOC).
The rate is revised according to the international market price. According to Dhungel, the new price list that is to be received on July 2 will have increased price of diesel. "The price in India has also gone up," he added.

Petroleum scarcity hits Valley

The petrol pumps in the Valley are once again running dry. The irritant is not hard to seek. It is the ubiquitous constraints in supply as the sole petroleum products supplier Nepal Oil Corporation (NOC) has been unable to supply enough due to diminishing stock.
The state-run sole petroleum supplier has said that its sole supplier Indian Oil Corporation (IOC) has reduced the sdupply as NOC could not pay its due.
However, some of the petroleum dealers are claiming that its NOC's old trick to hike the prices of petroleum products.
"The international price has come down by half to $70 per barrel currently from last year's $140 and NOC has hiked the prices of petroleum products twice in 2010, once in February and again in March," he said adding that the deep-rooted corruption in the state-oil monopoly is responsible for the accumulative losses.
In March, it has hiked petrol, diesel and kerosene prices. Petrol was hiked to Rs 80 per litre -- dearer by Rs 2.50 -- and diesel and kerosene prices were hiked to Rs 61 per litre -- Rs 2 dearer -- in Kathmandu Valley. It has not changed the price of cooking gas, that according to the corporation, is making loss. LPG -- popularly known as cooking gas -- costs Rs 1,250 per cylinder.
On every 1st and 15th of the English calender month, NOC receives the new rate of diesel, kerosene and petrol from its supplier IOC. However, the rate of cooking gas is revised -- according to the international market price -- on the first of every English month.
NOC said, its sole supplier IOC cut the supply from this time stating that it could not pay the dues.
The NOC has asked Rs 1 billion with the finance ministry that rejected the idea saying the government cannot give money. "The NOC asked us to either let it hike price or lend Rs 1 billion," the source at the ministry said adding that the ministry rejected both the option.

NOC, NEA plays foul in govt revenue collection

Failure of Nepal Oil Corporation (NOC) and Nepal Electricity Authority (NEA) to pay back their respective loans has hit the government's revenue collection target. The government had targetted to collect Rs 26.26 billion in non-tax revenues. But by the end of Jestha, the revenue collection has reached Rs 20.54 billion — over Rs 6 billion less than the target.

Similarly, revenue mobilisations through vehicle-tax and registration-fee have slowed down and they missed their respective targets by over Rs 1 billion and Rs 2 billion respectively. "The government has collected Rs 2.13 billion under vehicle-tax and Rs 4.73 billion under registration-fee by mid-June," said revenue secretary Krishna Hari Baskota. The targetted collection from vehicle-tax and registration-fee were Rs 3.50 billion and Rs 6 billion respectively.

Encouraged by the revenue collection trends, the government has revised its target upwards by Rs 13 billion to Rs 190 billion. Earlier in the budget for the fiscal year 2009-10, the government had set a revenue target of Rs 176.5 billion for the current financial year.

"We can still meet the revised target," Baskota claimed adding that the collection under customs, VAT and excise duties are encouraging. "Due to encouraging collection from customs, VAT and excise duties, we have exceeded the overall target," he added.

The government has collected Rs 31.26 billion under customs, Rs 47.84 billion under VAT, Rs 20.85 under excise and Rs 26.24 billion under income tax heads, pushing up the overall revenue collection.

"The total revenue collection has exceeded by 2.76 per cent to Rs 153.59 billion against the target of Rs 150.83 billion by the end of mid-June," said the revenue secretary. "The collection exceeded by 27 per cent compared to the samer period last fiscal."

In the same period last fiscal year, the government had collected Rs 121.23 billion.

Still, the largest contributor to the government coffer is VAT, followed by customs, implying a growing import and consumerism. According to Prof Dr Bishwambher Pyakurel, "The government is in a trap of import-based revenue, which is not a good sign for the economy. "We are already suffering from microeconmomic difficulties," he said. "We are losing our export competitiveness," Prof Dr Pyakurel added.

NOC hikes petrol price by Rs 2.50; diesel, kerosene prices by Rs 2

Nepal Oil Corporation (NOC) today hiked petrol, diesel and kerosene prices.
"Petrol will now cost Rs 80 per litre -- dearer by Rs 2.50 -- and diesel and kerosene will now cost Rs 61 per litre -- Rs 2 dearer -- in Kathmandu Valley," said the NOC.
However, consumers have to pay a little more as Nepal Petroleum Dealers' Association (NPDA) that distributes petroleum products throughout the country always sells petroleum products after adding costs. It raised the price to stop the back flow of the petroleum products to India as there has been price difference in between Indian and Nepali markets.
The state oil monopoly has not changed the price of cooking gas, that according to the corporation, is making loss. LPG -- popularly known as cooking gas -- costs Rs 1250 per cylinder.
NOC has also not changed the Aviation Turbine Fuel (duty paid) that it is selling at Rs 75 per litre and ATF (bonded) that it is selling at $805 per 1,000 litre.
Earlier, on February 18, NOC increased the price of kerosene and diesel each by a rupee per litre making them Rs 59 per litre in the Valley. But the price in Tarai districts was increased to Rs 57.70 per litre only.
NOC had then also decided to increase the price as, according to it, the sole supplier of petroleum products had been incurring losses in both diesel and kerosene that is the poor men's fuel.
The state-owned petroleum importer had been -- after the price hike -- raking in a profit of Rs 20 million a month against its loss of Rs 37.5 million per month
NOC has been adjusting prices of petroleum products every month as since last year prices started fluctuating, pushing the state-owned corporation into the red.
Earlier, it had increased the price of kerosene and diesel by Rs 3 per litre on November 17. Then, both kerosene and diesel prices were hiked to Rs 58 per litre. NOC used to make a profit of Rs 4 on a litre of kerosene after the hike, while it incurred a loss of Rs 2.50 on a litre of diesel.
NOC had started making profit when the downward revision of prices started in October 2008, which continued till March. But the rise in prices of petroleum products in the international market again brought it to its knees.
Every month -- on 16th as per the Roman calendar -- NOC receives a new price list for petrol, diesel from the IOC -- its sole supplier. However, on the first of every month, it receives a new price list for petrol, diesel, kerosene, Air Turbine Fuel (ATF) and cooking gas.

NOC hikes kerosene, diesel prices by one rupee

Nepal Oil Corporation (NOC) increased the price of kerosene and diesel -- both -- by one rupee per liter making them Rs 59 per litre in the Valley. But the price in the Tarai districts will be Rs 57.70 per litre.

"The price hike will come into effective from Thursday," said the sole petroleum importer.

The NOC board meeting on Wednesday late night has decided to increase the price as it has been incurring losses in both diesel and kerosene that is the poor men's fuel.

The state-owned petroleum importer will -- after the price hike -- profit Rs 20 million in a month. Earlier, it has been losing Rs 37.5 million per month, it said.

NOC has been adjusting the prices of the petroleum products every month as last year the prices started fluctuating pushing the state-owned corporation into red.

Earlier, it had increased the price of kerosene and diesel by Rs 3 per litre on November 17. Then, both kerosene and diesel prices were hiked to Rs 58 per litre. The NOC used to make a profit of Rs 4 in a litre of kerosene after the hike, while, it incurred a loss of Rs 2.50 in a litre of diesel.

The NOC had started making profit when the downward revision of prices started in October 2008, which continued till March. But the rise in the prices of petroleum products in the international market had again hit it to bring down to knees.

Every month - on 16th as per the Roman calendar - the NOC receives a new price list for petrol, diesel from the IOC -- its sole supplier. However, on the first of every month, it receives the new price list for petrol, diesel, kerosene, Air turbine Fuel (ATF) and cooking gas.

Tanker drivers strike hits petro supply

Once again the consumers are facing petroleum crisis, thanks to the Nepal Tanker Drivers' Association (NTDA).
"Due to the tanker drivers' agitation, the tankers have not been loaded with petroleum products since Monday," said Nepal Oil Corporation (NOC) spokesperson Mukund Dhungel. While some tankers are en route to the valley new supply has virtually stopped.Dhungel said that today NOC held discussions with the Nepal Tanker Transport Association (Parsa), All Nepal Transport Labourers' Association, Nepal Transport Free Labourers' Union (Raxaul), Nepal Oil Corporation Kathmandu Tankers Route Unit and Nepal Petrol Transport Association regarding the eight-point memorandum of the tanker drivers.
The drivers want that the eight-point demand conceded by the NOC be implemented. "NOC is ready to implement the agreement that was reached between the NOC and the tanker drivers," Dhungel said adding that on Thursday they would hold talks with the agitating drivers. Minimum wage and allotment of parking area are some of the demands of the drivers. The agreement over the demands was reached last year.
NTDA has been agitating since three days, urging NOC to implement previous agreements. The strike has disrupted transportation of petroleum products in the country coming from Raxaul. "We have distributed the petroluem products that we had in the valley, but there was no new supply," Dhungel said.
NOC said a crisis of confidence between NTDA and Petroleum Transport Association (PTA) had caused the problem.

Petrol scarcity to ease soon

If everything goes as planned, Kathmanduites will have enough petrol from Monday. The valley is facing a shortage of petrol since the last four days due to the Tarai bandh called by the Tharu community.
"Nepal Oil Corporation (NOC) has requested the Bara and Parsa districts' administration to clamp curfew tonight so that 200 empty tankers can reach Raxaul and other stranded tankers also can reach their destination," said Digambar Jha, managing director of NOC. Though 24 tankers have reached Kathmandu Valley, that cannot fulfill the demand here as the daily demand of the valley is at 300 kilolitres (kl). The state-oil monopoly's storage capacity in the valley is only 2,630 kl, which is adequate for only nine days.
"We are working to increase the storage capacity in Thankot," Jha said adding that the state-oil monopoly has already bought land for the storage depot. "Diesel storage capacity has been increased and stock of kerosene is also enough as the consumption of kerosene has gone down after price equalisation with diesel," he added. There is enough stock of Air Turbine Fuel (ATF).
NOC boasts of a cumulative storage capacity of 71,742.3 kl of petroleum products, which last for 30 days. But, it can store only 6,300 kl of diesel and kerosene each and 7,640 kl of ATF in the capital.
The valley's petrol stocks are depleted as many tankers are stranded at various places like Birgunj, Simra, Jeetpur and Kalaiya. "The ultimate solution is a pipeline," Jha said. "Otherwise the valley people will always have to face a shortage due to this reason or that."
Due to the blockade of the Raxual-Amlekhginj route NOC has been unable to supply petroleum products smoothly in the valley since the last four days. The Ministry of Commerce and Supplies and the Home Ministry are trying to impose curfew to allow the movement of petrol tankers.
"The Tharuhat movement, the protest of the squatters, the road blockade due to a tipper accident on Jitpur-Simara road stretch, the padlocking of Birjung customs offcie and the tanker strike has disrupted the supply," NOC stated. It has requested consumers to bear with it for another till Sundfay saying there will be ample supply from Monday.

Petrol crisis jolts public confidence

It seems that the valley denizens have stopped believing in the government's promises of smooth supply of petroleum products. Regular bandhs in the Tarai and blockade of the highways connecting to the capital -- the only supply route -- has taught them a new lesson: Hoarding of essential goods and petroleum products according to necessity.
Though Nepal Oil Corporation (NOC) has been selling adequate quantity of petrol, most of the petrol pumps in the Valley were crowded today especially by motorcyclists. At some of the pumps, queues were more than a half-kilometre.
"NOC here sold 3,00,000 litres of petrol on Friday to the petrol pumps and 1,00,000 litres was sold by the Amlekhgunj NOC depot that reached Kathmandu yesterday," informed NOC spokesperson Mukund Dhungel. NOC is the nation's sole petroleum products' distributor cum supplier.
Dhungel was of the view that there was no cause for lower supply. "The Thankot depot sold 22 tankerfuls of petrol today," he said adding that the around 1,00,000 litres of petrol sold today by the Amlekhgunj depot would reach the Valley by tomorrow. "Not only that, we have made arrangements to get supply from Bhairahawa also," he added.

The year 2008: Lost opportunity and demised economic revolution

At the start of 2008, except for fuel prices everything looked rosy. But, by the end of the year only fuel prices look rosy.
The year 2008 will go down in the country's history as one that saw experiments in policies and politics, all at the cost of the economy. Increased hours of power outages, insecurity, closure of industries and hotels by militant trade unions and the highs and lows of the stock market are merely some of the barbs that rankled this year.
When it started, the country had a liberal economist finance minister Dr Ram Sharan Mahat, who gilded the economic skyline with a golden brush. And now, when the year has come to an end we have the first Maoist finance minister Dr Baburam Bhattarai who believes that capitalism is the major cause of global economic doom.
Dr Bhattarai, on September 19, presented a deficit and ambitious budget of Rs 136.15 billion with tall claims of ushering in an economic revolution to change the centuries-old proletariat structure of Nepali society. The year 2008 leaves us with a shattered dream of economic revolution that we were promised. Nepal has lost one more year in political jingoism.
However, just after three months of the announcement of the budget and five months of the lapse of the current fiscal year, he is trying to stay afloat just to maintain the revenue target. His own militant trade union along with other ruling political party-affiliated ones are throttling industries, forcing their managments on the backfoot and making it generally difficult for them to even mainatin open-eye mode. The newly-formed industry ministry and its minister are trying even harder to understand the problems plaguing the industries that have seen nil growth in recent times. Frequent bandhs and increased load-shedding is bleeding the industries white.
The government may have eked out the revenue target but it has failed to start even a single development project and has double-failed in that it has not been able to create even a single job opportunity. Unemployment is forcing the country's young generation to fan out abroad in search of greener pastures but despite his claims the rebel-turned mainstream politico finance minister Dr Bhattarai has failed to provide them employment opportunities. He has been appealing to Nepali youths to return home but he has no explanation why they should when there are no employment opportunities.
Inflation stands at a high, high of 14.5 per cent despite claims by the central bank that it will crack whip on it and contain within 7.5 per cent. But its spiriling up, up and above, there is no respite to the people.
Of late, the country is getting singed from the heat of the global financial crisis, and migrant workers in Gulf countries as well as Malaysia - the major labour markets for Nepalis - are returning home, and that is certain to hit the remittance that is sent home.
Besides, there is capital flight due to one after another plant shutdown. Colgate-Palmolive is one example where the investors fled the country as they were not feeling safe despite the government's promises of creating an investment-friendly environment.
When the Maoists came to power, a section of society was bristling with excitement that the country would prosper and that there would be greater investment in development works while creating more jobs, but their dreams lie mute in the dust.
In the Tarai, mushrooming militant groups have got industrialists by the short hairs, spreading a donation-terror and making it difficult for them to do business. The law machinery has totally failed to protect industrialists and industrial areas.
The government has failed in all those very aspects that it had claimed that it would bring about change. The people's woes have not been addressed. In public view, it is instead the government itself that is suspected of corruption at the policy level. Instances abound.. Either in the name of declaring an energy crisis for the covert purpose of bringing thermal plants or clamping a ceiling on the purchase of vehicles priced beyond a certain amount just to protecting certain vested interests. You name, you have it. The list goes on...
The capital market -- propelled by the financial institutions -- saw a record high before plunging to the lowest of lows this year. It has no contribution of the real sector even after 15 years of operations. Capital market experts are not slow in pointing out that over and above all the mayhem and mess-up, the Maoist-led government has no 'definite policy' for capital market development.
The ministries of Industry and Transport Management & Labour failed to deliver on any score. The transport entrepreneurs have gone beyond the ministry pale and are forcing the general people to cough up hiked transport fares even after Nepal Oil Corporation, taking a cue from the global scenario, slashed the price of petroleum products four times in a row. Price cuts began on October 25. The slate is still open.
Burn, burn slower, that is the only message that 2008 is leaving us with. All else may be Humpty Dumptyish but it now costs less, on paper, to ride.
Let's ride, if only the transporters will have mercy.

Consumer at crossroads over pricing war

In the Valley-Petrol - Diesel - Kerosene
NOC price - Rs 85.50 - Rs 60.50 - Rs 60.50
NPDA price - Rs 85.70 - Rs 60.75 - Rs 60.75
-----------
The state oil monopoly Nepal Oil Corporation (NOC) has lived up to its promise, slashing the retail prices of petrol, diesel and kerosene, which will be applicable from this midnight.
Contrary to the global freefall of oil prices, the cuts are a paltry Rs 5 for each item. Currently, international price of crude is hovering around $50 per barrel (159 litres). It had risen to an unprecedented high of $147 per barrel about three months ago.
Ideally, the prices should have been readjusted on the same day NOC received the new price list from its sole supplier of petroleum products, Indian Oil Corporation (IOC). The delay has had a cascading effect in the Valley, which had stopped lifting petrol over the last couple of days, causing an artificial scarcity of sorts.
However, the reduction is couched in a shrewd pricing mechanism. Though in the face of it, the prices have been reduced by Rs 5, the Valley denizens will end up paying more due to Nepal Petroleum Dealers' Association (NPDA) and pollution controlling charge. The negligible alteration - Re 0.50 per litre more for petrol and diesel - in mark-up prices is attributed to 'pollution controlling charge'.
Consequently, petrol and diesel will be available for Rs 85.50 and Rs 60.50 per litre, respectively in the Valley, according to the NOC that has fixed revised price of kerosene at Rs 60.50 per litre, which is on a par with diesel. The cost of ever-scarce cooking gas (LPG) remains unchanged.
But, despite NOC's caveat, the Nepal Petroleum Dealers' Association (NPDA) is busy chalking out its own pricing mechanism.
"A consumer has to pay Rs 85.70 for per litre petrol, Rs 60.75 per litre diesel and Rs 60.75 for per litre kerosene in the Valley," according to NPDA.
Digamber Jha, managing director, NOC, strictly said that NOC fixes retail prices of petroleum products. "NOC will stop supply," he said adding that "if necessary NOC will also suspend the licence of those not following NOC's price list. But entreaties are likely to fall on deaf ears.
The price of Air Turbine Fuel (ATF) has also been reduced by $100 to $1,200 per kilolitre for international flights. Local aviation companies have to cough up Rs 95 per litre, a reduction of Rs 5. Incidentally, bowing to global cues, NOC was compelled to slash prices for the third time in as many months.
Notwithstanding the downward revision, NOC is raking in a tidy monthly profit of Rs 500 million. "But the present profit cannot make up for the cumulative loss that stands around Rs 15 billion. At this rate, NOC will be able to pay its outstanding loan to various financial institutions within next three years," said Purushottam Ojha, secretary at the ministry of commerce and supplies.
On the otherhand, NPDA authorities insisted that NOC price would adversely affect their business prospects within the Valley. They argued that the distance ensured a price difference of Rs 2 in each litre of fuel between the Valley and Hetauda. "Cumulatively, it adds up to an astounding difference of Rs 24,000 for a single tanker," they said.
A logic that may not cut ice with NOC. They, it seems, at loggerheads again and the consumers will again be at crossroads.