The country requires a huge infrastructure investment of above $60 billion in next 10-15 years and there is no alternative to PPP to develop infrastructure. But the PPP Act and Regulations have many constriants making private sector hesitant to invest on it.
The government has targetted 10,000 MW electricity generation in the next 10 years time, which alone will require an investment of $20 billion at current prices apart from an additional investment of $40 billion by the year 2025 in infrastructure, "That is, if our GDP grows consistently at seven per cent," experts opined.
"The problem is that the size of our economy is too small," said Maheshwor Prakash Shrestha, co-ordinator of Infrastructure Bank (proposed) while presenting his paper on Challenges and Constraints in PPP Financing - Bankers' Perspective, at an interaction on 'Private Financing in Building and Operation of Infrastructure Act 2063 and Regulations 2064', organised by the Ministry of Physical Planning and Works (MPPW), Public Private Partnership for Urban Environment (PPPUE), Ministry of Local Development and UNDP jointly here today.
Nepal's total GDP as of this mid-January was Rs 71,9480 million ($8.993 billion) and the total deposit base of the banking sector as a whole including development banks and finance companies is just a meagre $4.689 billion (Rs 37,5040 million).
"On the top of that, most of the deposits have maturity period of less than a year," Shrestha said adding that it was a challenge for the sector to book assets for a longer period, say of ten years or more. Infrastructure projects take a long time to complete and returns rolls in only after 10 to 12 years. PPP projects generally carry a stable lower rate of return. "Generally, they carry a return of 10 to 15 per cent," he said adding that in many cases the return does not justify comparatively higher rate of investment. Though, there are specific incentives by Nepal Rastra Bank to finance PPPs, banks finance PPPs on a basis similar to deprived sector lending," he informed.
However, the basic theme of PPP is joint resource sharing between the government and private sector for mutual benefit. But the PPP Act and rules there under does not treat the private sector and government at par, complained Shrestha adding that the government acts as a regulator and the private sector as a follower.
South Asia's infrastructure investment need is estimated at $94 billion per annum, according to Asian Development Bank. Infrastructure investments are nearly half the estimated need and are done predominantly by governments.
Nepal is very poor in terms of providing basic infrastructure facilities like energy, transportation, water and sanitation, pushing the country towards more poverty. World Bank says that infrastructure can deliver major benefits in economic growth, poverty alleviation, and environmental sustainability. Infrastructure represents, if not the engine, then the wheels of economic activity.Sukunta Lal Hirachan, immediate past president of the Federation of Contractors' Association of Nepal (FCAN) and Kamal Raj Pande, joint secretary at the MoPPW, also presented their papers at the programme where private developers, banks, project developers (consultants) took part. The programme has been organised to disseminate information, sensitise and obtain feedback on the PPP Act and Regulation.
Monday, December 8, 2008
Sunday, December 7, 2008
India unveils IRs 3,000 billion package to pump prime economy
New Delhi: In a bid to contain the impact of the global financial crisis on India, the government Sunday unveiled a IRs 300,000 crore (IRs 3,000 billion/$60 billion) package to pump prime the economy with specific measures for various sectors.
The amount is to be spent over the remaining four months on a host of areas and stake holders such as exporters, housing, infrastructure and textiles. A four per cent cut in Value Added Tax (VAT) has also been announced to help the corporate sector in general.
"The government has been concerned about the impact of the global financial crisis on the Indian economy and a number of steps have been taken to deal with this problem," an official statement said, unveiling the package.
The measures Sunday come a day after the central bank reduced its key rates and eased the norms for accessing overseas funds to reduce the cost of borrowing for commercial banks and signal them to lower interest rate for India Inc.
These measures were overseen by Indian Prime Minister Manmohan Singh himself, in consultations with now Home Minister P Chidambaram, Planning Commission Deputy Chairman Montek Singh Ahluwalia and Commerce Minister Kamal Nath, officials said.
As a first step, the United Progressive Alliance (UPA) government will seek parliament's mandate for an additional allocation of IRs 200 billion to take the authorised plan and non-plan expenditure to IRs 3,000 billion in the remaining months of the fiscal. Parliament session is slated to open December 10.
“The economy will continue to need stimulus in 2009-2010 also and this can be achieved by ensuring a substantial increase in plan expenditure as part of the budget for next year,” the statement said.
The measures for exporters, who saw a decline in shipments in October for the first time in five years, include an interest support of two percent for labour intensive sectors like textiles, handicraft and handloom.
This apart, additional allocation has been made towards various incentives for exporters, guarantee of export credit, full refund of service tax to foreign agents and refund of service tax under the duty drawback scheme.
Instructions have also been given to state-run banks to unveil a scheme under which borrowers for houses under two categories - up to IRs 500,000 and up to IRs 2 million - will get special incentives.
“Housing is a potentially very important source of employment and demand for critical sectors and there is a large unmet need for housing in the country, especially for middle and low income groups,” the statement said.
For small and micro enterprises, the limits under the credit guarantee scheme which gives access to working capital and other financial needs, have been doubled to IRs 10 million.
The lock in period for loans covered under the existing credit guarantee scheme is also being reduced from 24 to 18 months to encourage banks to extend more loans under the credit guarantee scheme, the statement said.
The government has also authorised the India Infrastructure Finance Co Ltd (IIFCL) to raise IRs 100 billion ($2 billion) through tax-free bonds to support financing of government-financed infrastructure projects.
“These funds will be used by IIFCL to refinance bank lending of longer maturity to eligible infrastructure projects, particularly in highways and port sectors.” In a push to the automobile sector, government departments have been allowed to replace vehicles within the allowed budget, with a major relaxation in the time-consuming procedures.
This apart, import duty on naphtha for use by the power sector is being reduced to zero, while export duty on iron ore fines will be eliminated, and reduced to five per cent for lumps.
“The government is keeping a close watch on the evolving economic situation and will not hesitate to take any additional steps that may be needed to counter recessionary trends and maintain the pace of economic activity.” -- Agencies
Highlights of India's fiscal stimulus package
New Delhi: The following are the highlights of the fiscal stimulus package unveiled by the government Sunday to contain the impact of global financial crisis on the Indian economy:
- Plan, non-plan expenditure of IRs 300,000 crore (IRs 3,000 billion/$60 billion) in four months
- Parliament nod to be sought for IRs 20,000 crore more toward plan expenditure
- Across-the-board cut of four percent in the ad valorem central value-added tax
- Interest subvention of two percent on export credit for labour intensive sectors
- Additional allocations for export incentive schemes
- Full refund of service tax paid by exporters to foreign agents
- Incentives for loans on housing for up to IRs 500,000, and up to IRs 2 million
- Limits under the credit guarantee scheme for small enterprises doubled
- Lock-in period for loans to small firms under credit guarantee scheme reduced
- India Infrastructure Finance Co allowed to raise IRs 100 billion through tax-free bonds
- Norms for government departments to replace vehicles relaxed
- Import duty on naphtha for use by the power sector is being reduced to zero
- Export duty on iron ore fines eliminated
- Export duty on lumps for steel industry reduced to five percent -- Agencies
The amount is to be spent over the remaining four months on a host of areas and stake holders such as exporters, housing, infrastructure and textiles. A four per cent cut in Value Added Tax (VAT) has also been announced to help the corporate sector in general.
"The government has been concerned about the impact of the global financial crisis on the Indian economy and a number of steps have been taken to deal with this problem," an official statement said, unveiling the package.
The measures Sunday come a day after the central bank reduced its key rates and eased the norms for accessing overseas funds to reduce the cost of borrowing for commercial banks and signal them to lower interest rate for India Inc.
These measures were overseen by Indian Prime Minister Manmohan Singh himself, in consultations with now Home Minister P Chidambaram, Planning Commission Deputy Chairman Montek Singh Ahluwalia and Commerce Minister Kamal Nath, officials said.
As a first step, the United Progressive Alliance (UPA) government will seek parliament's mandate for an additional allocation of IRs 200 billion to take the authorised plan and non-plan expenditure to IRs 3,000 billion in the remaining months of the fiscal. Parliament session is slated to open December 10.
“The economy will continue to need stimulus in 2009-2010 also and this can be achieved by ensuring a substantial increase in plan expenditure as part of the budget for next year,” the statement said.
The measures for exporters, who saw a decline in shipments in October for the first time in five years, include an interest support of two percent for labour intensive sectors like textiles, handicraft and handloom.
This apart, additional allocation has been made towards various incentives for exporters, guarantee of export credit, full refund of service tax to foreign agents and refund of service tax under the duty drawback scheme.
Instructions have also been given to state-run banks to unveil a scheme under which borrowers for houses under two categories - up to IRs 500,000 and up to IRs 2 million - will get special incentives.
“Housing is a potentially very important source of employment and demand for critical sectors and there is a large unmet need for housing in the country, especially for middle and low income groups,” the statement said.
For small and micro enterprises, the limits under the credit guarantee scheme which gives access to working capital and other financial needs, have been doubled to IRs 10 million.
The lock in period for loans covered under the existing credit guarantee scheme is also being reduced from 24 to 18 months to encourage banks to extend more loans under the credit guarantee scheme, the statement said.
The government has also authorised the India Infrastructure Finance Co Ltd (IIFCL) to raise IRs 100 billion ($2 billion) through tax-free bonds to support financing of government-financed infrastructure projects.
“These funds will be used by IIFCL to refinance bank lending of longer maturity to eligible infrastructure projects, particularly in highways and port sectors.” In a push to the automobile sector, government departments have been allowed to replace vehicles within the allowed budget, with a major relaxation in the time-consuming procedures.
This apart, import duty on naphtha for use by the power sector is being reduced to zero, while export duty on iron ore fines will be eliminated, and reduced to five per cent for lumps.
“The government is keeping a close watch on the evolving economic situation and will not hesitate to take any additional steps that may be needed to counter recessionary trends and maintain the pace of economic activity.” -- Agencies
Highlights of India's fiscal stimulus package
New Delhi: The following are the highlights of the fiscal stimulus package unveiled by the government Sunday to contain the impact of global financial crisis on the Indian economy:
- Plan, non-plan expenditure of IRs 300,000 crore (IRs 3,000 billion/$60 billion) in four months
- Parliament nod to be sought for IRs 20,000 crore more toward plan expenditure
- Across-the-board cut of four percent in the ad valorem central value-added tax
- Interest subvention of two percent on export credit for labour intensive sectors
- Additional allocations for export incentive schemes
- Full refund of service tax paid by exporters to foreign agents
- Incentives for loans on housing for up to IRs 500,000, and up to IRs 2 million
- Limits under the credit guarantee scheme for small enterprises doubled
- Lock-in period for loans to small firms under credit guarantee scheme reduced
- India Infrastructure Finance Co allowed to raise IRs 100 billion through tax-free bonds
- Norms for government departments to replace vehicles relaxed
- Import duty on naphtha for use by the power sector is being reduced to zero
- Export duty on iron ore fines eliminated
- Export duty on lumps for steel industry reduced to five percent -- Agencies
Saturday, December 6, 2008
Nepse shows abnormal behaviour
It happens only in Nepal. It has happened earlier also, when Maoists walked out of the government, Nepse gained.
And this time too, a week after Securities Board of Nepal (Sebon) chairman Dr Chiranjivi Nepal put in his papers, the Nepal Stock Exchange (Nepse) index gained 22.73 points to reach 754.91 points - from last week's closing of 732.18 points - giving a clue to long-suspected manipulation of the market. Under normal conditions, the market should plunged after the board chair went vacant.
All key market propellers - commercial banks, development banks, finance companies, hydropower companies gained, posting 741.85 points, 1137.28 points, 980.77 points and 950.23 points, respectively. Only the insurance company group ended in negative territory, shedding 11.78 points to tumble to 759.57 points.
The sensitive index - the barometer of group-A companies - also gained 3.92 points to climb to 198.48 points. The domination of group- A companies continued this week too as they contributed 77.30 per cent to the total amount transacted. Similarly, the float index - calculated on the basis of real transactions - rose by 0.99 points to reach 73.17 points.
Shareholders of Bank of Kathmandu, this week, gained the most as in terms of monetary value, Bank of Kathmandu (with Rs 88.43 million), Siddhartha Bank (with Rs 44.48 million), Standard Chartered Bank Nepal (with Rs 31.60 million) and Sanima Bikas Bank (with Rs 27.92 million) and Nepal Investment Bank (with Rs 23.07 million) were top scorers.
The market wound up in negative territory for three days in its five-day session. However, it opened in green on Sunday. Nepse gained 18.53 points that day and 15.05 points on Monday to rise to 761.67 points on Tuesday. However, it dipped on Wednesday and Thursday.
In terms of numbers of share units traded, Bank of Kathmandu topped the chart with 43,000-unit shares while in terms of number of transactions Prabhu Finance topped the chart with 421 transactions.
Narayani Finance, Annapurna Bikas Bank, International Leasing and Finance and Guheshwori Merchant and Finance listed their rights shares whereas Diprox Bikas Bank listed its 52,200-unit of bonus shares at Nepse.The government and other institutions' bonds and debentures could not generate public interest in the secondary market. Nepse did not witness any such transaction. Similar was the fate of Over The Counter (OTC) market that also has not seen a single transaction since it started a few months back.
New Sebon chief anytime soon
KATHMANDU: The Finance Ministry will appoint a new chairman of Sebon early this week, according to a ministry source. A retired bureaurocrat is tipped to be the most probable candidate for the post. The post went vacant when Dr Chiranjivi Nepal resigned the chairmanship citing 'no seriousness' on part of Finance Minister Dr Baburam Bhattarai towards developing the capital market. Meanwhile, the government also announced a vacancy for the post of Nepse's general manager. The incumbent general manager Rewat Bahadur Karki has got an extension after his tenure ended three months ago. Karki will stay until a successor is named.
And this time too, a week after Securities Board of Nepal (Sebon) chairman Dr Chiranjivi Nepal put in his papers, the Nepal Stock Exchange (Nepse) index gained 22.73 points to reach 754.91 points - from last week's closing of 732.18 points - giving a clue to long-suspected manipulation of the market. Under normal conditions, the market should plunged after the board chair went vacant.
All key market propellers - commercial banks, development banks, finance companies, hydropower companies gained, posting 741.85 points, 1137.28 points, 980.77 points and 950.23 points, respectively. Only the insurance company group ended in negative territory, shedding 11.78 points to tumble to 759.57 points.
The sensitive index - the barometer of group-A companies - also gained 3.92 points to climb to 198.48 points. The domination of group- A companies continued this week too as they contributed 77.30 per cent to the total amount transacted. Similarly, the float index - calculated on the basis of real transactions - rose by 0.99 points to reach 73.17 points.
Shareholders of Bank of Kathmandu, this week, gained the most as in terms of monetary value, Bank of Kathmandu (with Rs 88.43 million), Siddhartha Bank (with Rs 44.48 million), Standard Chartered Bank Nepal (with Rs 31.60 million) and Sanima Bikas Bank (with Rs 27.92 million) and Nepal Investment Bank (with Rs 23.07 million) were top scorers.
The market wound up in negative territory for three days in its five-day session. However, it opened in green on Sunday. Nepse gained 18.53 points that day and 15.05 points on Monday to rise to 761.67 points on Tuesday. However, it dipped on Wednesday and Thursday.
In terms of numbers of share units traded, Bank of Kathmandu topped the chart with 43,000-unit shares while in terms of number of transactions Prabhu Finance topped the chart with 421 transactions.
Narayani Finance, Annapurna Bikas Bank, International Leasing and Finance and Guheshwori Merchant and Finance listed their rights shares whereas Diprox Bikas Bank listed its 52,200-unit of bonus shares at Nepse.The government and other institutions' bonds and debentures could not generate public interest in the secondary market. Nepse did not witness any such transaction. Similar was the fate of Over The Counter (OTC) market that also has not seen a single transaction since it started a few months back.
New Sebon chief anytime soon
KATHMANDU: The Finance Ministry will appoint a new chairman of Sebon early this week, according to a ministry source. A retired bureaurocrat is tipped to be the most probable candidate for the post. The post went vacant when Dr Chiranjivi Nepal resigned the chairmanship citing 'no seriousness' on part of Finance Minister Dr Baburam Bhattarai towards developing the capital market. Meanwhile, the government also announced a vacancy for the post of Nepse's general manager. The incumbent general manager Rewat Bahadur Karki has got an extension after his tenure ended three months ago. Karki will stay until a successor is named.
Economic crisis looming large
Former vice-chairman of National Planning Commission (NPC) Dr Shankar Sharma today said the Maoists’ ‘economic revolution’ had failed.
“The delay in service delivery, tug-of war in the Maoist party — between hardliners and moderate faction — and continuous labour problem have put an end to the Maoist claim of economic revolution,” Dr Sharma said, addressing an interaction on ‘Global Economic Crisis and its impact on Nepal’ organised here today.
“Nepal will feel the heat of global crisis a little late as it is not directly linked to the global financial market. But Nepali exports, tourism sector, foreign direct investment (FDI) and remittances will bear the brunt of the crisis,” Prof Bishwambher Pyakurel said, adding that the government has to cough up Rs 1.9 billion more to pay off foreign debt due to rising US dollar.
Former secretary Dr Bhola Chalise said, “The impact will be felt late but was inevitable. The government’s attitude towards the looming crisis is surprising.” He came down heavily on the government for its lackadaisical approach towards crisis mitigation.
Earlier this week, Finance Minister Dr Baburam Bhattarai claimed that Nepal had not been hit by global crisis. He had presented the first quarter’s data to justify his point.
“However, the crisis started in September,” Dr Sharma said, adding that it will take six months to one year to affect Nepali economy. “It’s obvious that the old data, which the Finance Minister presented, doesn’t show any impact,” the former vice-chairman said.
“The data is encouraging,” Finance Secretary Rameshwor Khanal said, defending the government, and added that there was enough liquidity in the financial system at present. “There might be some impact. That’s why the government has formed a committee to study its impact,” he added.
Kush Kumar Joshi, president of Federation of Nepalese Chambers of Commerce and Industry (FNCCI), said the entrepreneurs had started paying the price of the global meltdown. “The first impact has been on food commodities,” he said, adding,”Apart from that, the private sector - despite government’s repeated claims - is suffering from labour dispute. Around 54 industries were closed or remained closed for a long time in the last six months.” Complaining of lawlessness in the country, Joshi said, “Security is our primary concern.”
“The increase in revenue generation will not sustain in the long run,” Dr Dilli Raj Khanal, another economist said, adding that the government can neither meet the GDP target of seven per cent nor will it be able to curb the price rise.
"India is bringing a stimulus package tomorrow and Nepal government is still taking the looming crisis surfacially," he blamed.
“The delay in service delivery, tug-of war in the Maoist party — between hardliners and moderate faction — and continuous labour problem have put an end to the Maoist claim of economic revolution,” Dr Sharma said, addressing an interaction on ‘Global Economic Crisis and its impact on Nepal’ organised here today.
“Nepal will feel the heat of global crisis a little late as it is not directly linked to the global financial market. But Nepali exports, tourism sector, foreign direct investment (FDI) and remittances will bear the brunt of the crisis,” Prof Bishwambher Pyakurel said, adding that the government has to cough up Rs 1.9 billion more to pay off foreign debt due to rising US dollar.
Former secretary Dr Bhola Chalise said, “The impact will be felt late but was inevitable. The government’s attitude towards the looming crisis is surprising.” He came down heavily on the government for its lackadaisical approach towards crisis mitigation.
Earlier this week, Finance Minister Dr Baburam Bhattarai claimed that Nepal had not been hit by global crisis. He had presented the first quarter’s data to justify his point.
“However, the crisis started in September,” Dr Sharma said, adding that it will take six months to one year to affect Nepali economy. “It’s obvious that the old data, which the Finance Minister presented, doesn’t show any impact,” the former vice-chairman said.
“The data is encouraging,” Finance Secretary Rameshwor Khanal said, defending the government, and added that there was enough liquidity in the financial system at present. “There might be some impact. That’s why the government has formed a committee to study its impact,” he added.
Kush Kumar Joshi, president of Federation of Nepalese Chambers of Commerce and Industry (FNCCI), said the entrepreneurs had started paying the price of the global meltdown. “The first impact has been on food commodities,” he said, adding,”Apart from that, the private sector - despite government’s repeated claims - is suffering from labour dispute. Around 54 industries were closed or remained closed for a long time in the last six months.” Complaining of lawlessness in the country, Joshi said, “Security is our primary concern.”
“The increase in revenue generation will not sustain in the long run,” Dr Dilli Raj Khanal, another economist said, adding that the government can neither meet the GDP target of seven per cent nor will it be able to curb the price rise.
"India is bringing a stimulus package tomorrow and Nepal government is still taking the looming crisis surfacially," he blamed.
Wednesday, December 3, 2008
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.
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.
Tuesday, December 2, 2008
Dry day ahead of third cut in fuel prices in as many months
Some petrol pumps in the Valley were dry today, albeit deliberately. The reason, though, isn’t hard to seek. The pump owners didn’t replenish their quota, thanks to the ‘open secret’ that petrol prices will be slashed tomorrow.
Saroj Pandey, president, Nepal Petroleum Dealers' Association (NPDA), admitted the dealers’ reluctance. “Prices will be cut tomorrow. But there isn’t any crisis as other pumps were selling petrol. Nepal Oil Corporation (NOC) also didn’t lift petrol from Raxual yesterday and today," he said.
The sole-petroleum supplier has started reviewing the prices from last month. As per the practice, NOC receives the price list from its benefactor Indian Oil Corporation (IOC) on the second and 16th of every month. The cut comes in the wake of new IOC list, which NOC received yesterday. The authorities would review the prices on the basis of the list they receive on second of every month.
Minister for Commerce and Supplies Rajendra Mahato also made a grand announcement on Sunday that fuel prices would go down from Wednesday.
However, NOC officials should have reviewed the price on the same day it receives the list from the IOC. There is always a possibility of a ‘dry day’ — when the price either goes up or down depending on the global cues — every month.
"This problem may not arise from January. We will understand the repercussion by then,” said Pandey.
NOC has reduced petrol prices twice in as many months. Petrol has been slashed to Rs 90 per litre and diesel to Rs 65 per litre.
NOC board will meet at 12 noon tomorrow to decide on the exact figure. According to sources, some senior NOC officials are against the price review, citing delay in transport fare cut.
As per the new price list, NOC stands to lose Rs 61 for each cooking gas (LPG) cylinder. But it will up with other petroleum products. It will make a tidy profit of Rs 27 for each litre of petrol, Rs 47 for Air Turbine Fuel, Rs 8 for diesel and Rs 9 for kerosene
Saroj Pandey, president, Nepal Petroleum Dealers' Association (NPDA), admitted the dealers’ reluctance. “Prices will be cut tomorrow. But there isn’t any crisis as other pumps were selling petrol. Nepal Oil Corporation (NOC) also didn’t lift petrol from Raxual yesterday and today," he said.
The sole-petroleum supplier has started reviewing the prices from last month. As per the practice, NOC receives the price list from its benefactor Indian Oil Corporation (IOC) on the second and 16th of every month. The cut comes in the wake of new IOC list, which NOC received yesterday. The authorities would review the prices on the basis of the list they receive on second of every month.
Minister for Commerce and Supplies Rajendra Mahato also made a grand announcement on Sunday that fuel prices would go down from Wednesday.
However, NOC officials should have reviewed the price on the same day it receives the list from the IOC. There is always a possibility of a ‘dry day’ — when the price either goes up or down depending on the global cues — every month.
"This problem may not arise from January. We will understand the repercussion by then,” said Pandey.
NOC has reduced petrol prices twice in as many months. Petrol has been slashed to Rs 90 per litre and diesel to Rs 65 per litre.
NOC board will meet at 12 noon tomorrow to decide on the exact figure. According to sources, some senior NOC officials are against the price review, citing delay in transport fare cut.
As per the new price list, NOC stands to lose Rs 61 for each cooking gas (LPG) cylinder. But it will up with other petroleum products. It will make a tidy profit of Rs 27 for each litre of petrol, Rs 47 for Air Turbine Fuel, Rs 8 for diesel and Rs 9 for kerosene
Monday, December 1, 2008
PM's promise of fare cut proves hollow
The Nepal Meter Taxi Association (NMTA) has reduced taxi fares by seven per cent after continuous pressure. However, it should have reduced the fares a month ago on November 1 when Nepal Oil Corporation (NOC) has reduced the petroleum products' prices for the second time in a week.
When asked about the delay in reducing taxi fares, contacted, NMTA officials clammed up.
NOC is slated to reduce the price of petroleum products again on December 3, and NMTA too would have to once again reduce the fare accordingly. NOC reduced the petroleum products' prices twice - on October 25 and November 1 - but public transport vehicles did not reduce the fare accordingly though they arbitarily increased fares when the price of petro-products had gone up.
The student unions were protesting against the transporters to create pressure for fare reduction. They have, however, taken their protest programme back after an assurance from Prime Minister Pushpa Kamal Dahal 'Prachanda' that fares would be reduced within two days.
The PM said he would ensure that public transportation complies with the transport ministry's decision to reduce the fares by seven per cent in petrol-run vehicles and six per cent in diesel-run vehicles within two days. However, except for taxis public transport vehicles are yet to reduce the fares.
The Department for Transport Management (DoTM), under the Ministry for Labour and Transport Management, has urged the general people to be wary of taxis charging higher fares.
"Support us by informing about taxis charging high fares. Dial the DoTM's numbers 4602126 and 4601002," the department said adding that it has already seized the licenses and other important documents of four taxis on the charge of taking higher taxi fares after an investigation by its probe committee.
Meanwhile, NMTA through a press release has asked all taxi drivers to charge seven per cent less fares and told them to take the list of seven per cent discount fares fixed by the government on November 22.
When asked about the delay in reducing taxi fares, contacted, NMTA officials clammed up.
NOC is slated to reduce the price of petroleum products again on December 3, and NMTA too would have to once again reduce the fare accordingly. NOC reduced the petroleum products' prices twice - on October 25 and November 1 - but public transport vehicles did not reduce the fare accordingly though they arbitarily increased fares when the price of petro-products had gone up.
The student unions were protesting against the transporters to create pressure for fare reduction. They have, however, taken their protest programme back after an assurance from Prime Minister Pushpa Kamal Dahal 'Prachanda' that fares would be reduced within two days.
The PM said he would ensure that public transportation complies with the transport ministry's decision to reduce the fares by seven per cent in petrol-run vehicles and six per cent in diesel-run vehicles within two days. However, except for taxis public transport vehicles are yet to reduce the fares.
The Department for Transport Management (DoTM), under the Ministry for Labour and Transport Management, has urged the general people to be wary of taxis charging higher fares.
"Support us by informing about taxis charging high fares. Dial the DoTM's numbers 4602126 and 4601002," the department said adding that it has already seized the licenses and other important documents of four taxis on the charge of taking higher taxi fares after an investigation by its probe committee.
Meanwhile, NMTA through a press release has asked all taxi drivers to charge seven per cent less fares and told them to take the list of seven per cent discount fares fixed by the government on November 22.
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