Public transport fares slashed, albeit nominally

Department of Transport Management has today slashed the public transport fares, albeit nominally that is unlikely to benefit the commuters.  The new fare will come into effect from tomorrow, according to the department.
But the fare cut will not benefit the Kathmanduits. With the reduction in transport fare, minimum transport fare in the Kathmandu valley will remain unchanged at Rs 13 and maximum will be Rs 24. Similarly, fare distance of up to 16 km also remains unchanged. Fare for trips between 16 km and 25 km will come down by Re 1 to Rs 24 from Rs 25. Similarly, passengers will have pay Rs 5 less for every 100 km. The price rate of taxi per km will be Rs 35, a reduction of Rs 1 per km from earlier.
The fares have been reduced by 2.53 per cent in public transport, 1.65 per cent in taxis and 3.76 per cent in Hill cargo and 3.28 per cent in Tarai cargo transport, according to the department.
Likewise, the fare for Kathmandu-Narayanghat-Hetauda has come down to Rs 412 from existing Rs 423, while travelling from Kathmandu to Birgunj or Birgunj to Kathmandu will cost Rs 491, down from Rs 504.
Ministry of Physical Infrastructure and Transportation approved the department's decision to cut the fare today afternoon.
Last week, Office of Prime Minister and Council of Ministers had directed the department to reduce transport fare in line with plummeting fuel prices. When the government last revised the transport fares on September 10, 2015, petrol sold at Rs 104 and diesel at Rs 81 per litre compared to the recent price of Rs 99 and Rs 75, respectively.
Though, the government officials claimed that the new adjustment is scientific, the fare has been reduced on the basis of falling fuel price only. "We have reduced the fare on the basis of Scientific Fare Determination Mechanism," director at the department Mukti KC said.
Fuel carries 35 per cent weightage in the fare adjustment process. Other factors like salary/allowance of drivers/staff, price of spare parts, maintenance, battery, and depreciation, among other indicators, carry 65 per cent weightage.
"The Scientific Fare Determination Mechanism permits us to revise transportation fare only, if price of fuel goes up or down by at least Rs 5 per litre," he said, adding that they have adjusted the new fare as price of petrol and diesel has lately gone down by Rs 5 and Rs 6 per litre, respectively.
However, consumer rights groups claim that passengers do not benefit also because of weak monitoring and implementation by the government side. "The transporters' syndicate is stronger than the government," they claimed, adding that the transporters also have political patronage that the consumers donot have.
But, the government officials – as usual – reiterate that they 'will adopt effective monitoring mechanism and will take action against overcharging transporters."

Prime Minister's Office directs NOC to reduce fuel price

The government has directed Nepal Oil Corporation (NOC) to reduce fuel prices instantly in line with the decline in crude oil price in the international market. Similarly, the Department of Transport Management (DoTM) – through Ministry of Physical Infrastructure and Transport – has also been directed to reduce public transportation fares. Stating that Nepali consumers have not been benefitting from the significant declines in international oil price, the Office of the Prime Minister and Council of Ministers (OPMCM) today wrote separately to the NOC and DoTM to slash fuel prices and revise public transport fares accordingly. The OPMCM spokesman Uttam Kumar Khatri confirmed that the office has written both the entities letters to slash the prices accordingly.
The office has, however, not clarified what action it would take, if the state entities not follow its directives. Earlier too, the office used to issue directives but the state entities are not responsible to either state or people.
Despite continuous drop in crude oil prices in the international market, the Nepal Oil Corporation (NOC) has not adjusted fuel prices downwards citing shortage of the petroleum products.
Though the crude oil price plunged to a 12-year low of $32 per barrel in the international market in January second week, Nepali consumers have not been able to benefit from it as the responsible bodies did not slash the fuel prices and transport fares, accordingly.
"While NOC has not reduced fuel price according to the declining crude oil price in the international market, the DoTM also has not reduced public transport fares,” said Khatri.
Earlier on January 18, NOC had reduced the prices of petrol and diesel by Rs 5 per liter and Rs 6 per liter, respectively, despite the automatic pricing system it adopted since almost a year ago. Currently, petrol costs Rs 99 and diesel and kerosene cost Rs 75 per liter, respectively.
Meanwhile, student unions affiliated to various political parties today organised a sit-in protest in front of NOC demanding smooth supply of petroleum products and action against the black-marketeers of petroleum products. Student unions affiliated with three Maoist parties – UCPN-Maoist, CPN-Maoist (Revolutionary) and CPN-Maoist – had staged sit-in protest in front of NOC's central office at Babarmahal in the afternoon. The NOC has been encouraging illegal import of petroleum products after Indian blockade – since September – that halted supply of fuel from the Indian Oil Corporation (IOC). The IOC that is the only supplier of fuel to NOC refused to supply essential fuel – despite the agreement between NOC and IOC to supply uninterrupted fuel – saying that it has no orders from Indian government to supply oil.
Likewise, the student unions have also demanded NOC to adjust fuel price in line with the decline in international crude price. They have also demanded that the NOC adopt long-term policies regarding production, supply and storage of petroleum products and end the ongoing crisis immediately.
Crude prices have been plummeting in the international market continuously since last four months but the state oil monopoly has not been revising the prices downwards, instead it has separted a huge chunk from its profits for bonus. The technically bankrupt NOC srill has to pay Rs 12 billion loan to the government. Earlier, it had Rs 32 billion loan last fiscal year.

BBB Champions to start oil, gas exploration soon

The US-based BBB Champions Oil and its UAE partner Emirates Associated Business Group (EABG) are going to start oil and gas exploration in block 8 in Janakpur, block 9 in Rajbiraj, and block 10 in Biratnagar from December.

BBB Champions and EABG expects to spend over $ 10 million per block in their exploration phase in each of the three blocks to locate, identify and establish oil and gas production both conventionally and unconventionally, said president of BBB Champions Oil Michael D Mitcham here today.

"If the combined efforts of exploration are successful, Nepal will become independent on energy," he said, adding that it will also raise the standard of living and contribute to the overall economy.

The Department of Mines and Geology had awarded three petroleum exploration blocks to the US-based BBB Champions Oil and the Dubai-based Emirates Associated Business Group on July 5 after a cabinet approval.

The department had asked for bids for petroleum exploration in three blocks — 8, 9 and 10 — in January.

The companies will have four years to complete the exploration work, according to the department. "They can also extend the term for four more years in two installments, if they fail to meet the deadline but their work progress has to be satisfactory," it added.

With the handing over of the three blocks, all the 10 blocks have been handed over to foreign companies for exploration.

The government had already awarded two blocks — block 3 in Banke and block 5 in Chitwan — to Houston-based Texana Resources Company, and five blocks to a Scottish oil and gas company Cairn Energy.

Similarly, Cairn also has a licence to explore five other blocks; block 1 in Dhangadi, block 2 in Karnali, block 4 in Lumbini, block 6 in Birgunj and block 7 in Malangawa.

The department has divided the Terai and Siwalik Hills into 10 exploration blocks of 5,000-sq-km each for oil and gas exploration.

Comen starts futures contract for wheat

Commodities and Metal Exchange Nepal (Comen) has started the futures trading of wheat as its tenth commodity.

The exchange has brought three types of contracts for the wheat trading – Wheat October, Wheat November and Wheat December. The trading will be undertaken under matching basis. The futures contract for wheat expires in three months. The unit for contract has been determined as 10 tonnes and commission for each unit is Rs 150, according to the Comen — the oldest commodity exchange in Nepal.

Comen has taken the price determined by Morang Trade Association as the basis price. The trade settlement for the day contract will be based on the day's wheat price quoted by Morang Trade Association.

However, the futures contract being based on matching basis, Comen will deliver the wheat only if the buyer and seller both agree on delivery. Apart from wheat, Comen is involved in the Gold, Silver, Zinc, Copper, Crude Oil, Nikkel, Lead, NLS and Aluminium futures contract.

The exchange is all set to start the futures trading of Sugar as the eleventh commodity soon.

Comen launches new contracts

Commodities & Metal Exchange Nepal Ltd (Comen) has launched new contracts in order to cater to the investment needs of its clients. "We have added new sizes of gold, natural gas, crude oil and zinc," said the Comen. "Besides the existing one-kg and 100-gm gold contracts, we have launched a new gold contract of 500-gm," it said adding that it has also launched a new 1,250 mmBTU natural gas contract along with two new crude oil contracts with the size of 300-barrel and 50-barrel.
"Under zinc, we have launched a new five-tonne zinc contract," said the first state-of-the art exchange in Nepal.
Comen was the only exchange in Nepal to have such investment and technical support from the commodity relevant institutions until some time ago. Currently, there are three commodities exchanges.
Mercantile Exchange Nepal Ltd (Mex) and Nepal Derivative Exchange (NDEX) are the two other exchanges for commodity & futures markets.
These are the platform for the futures that is primarily intended for hedging and speculation. Contracts in futures market result mostly in cash settlement and do not frequently result in delivery.
With the establishment of Mex, new investment sector has been generated where investors can mitigate their risk in different commodities ranging from precious metals, energies to agro-products.

MEX receives guest
KATHMANDU: Deputy Minister for Child Development and Women’s Affairs of Sri Lanka visited Mercantile Exchange Nepal Ltd (Mex) to know about the operational set-up of futures market in Nepal. MLAM Hisbullah, who landed in Nepal on Monday on an official visit, went to the exchange. Hisbullah took time from his busy schedule and met Dipendra Khatiwada, MD and Mr Jitesh Surendran, CEO of Mex to understand the functioning of MEX in Nepal. Hisbullah also visited Nepal Spot Exchange (NSE).

Comen starts crude oil, natural gas contracts

Commodities & Metal Exchange Nepal (Comen) has opened two new commodity futures contracts trading platforms -- 'crude oil' and 'natural gas' -- from today.

"As a part of our constant efforts to provide value and new products to our investors, we are pleased announce two new products," said Vijay Satyal, chief executive officer of Comen.

The contract symbol for crude oil is CRUDE OIL and Comen is launching CRD/APR/10 contract. The trading unit for crude oil is 100 barrels and the base price will be displayed per barrel, he said adding that the intra-day margin is Rs 40,000 per unit with an overnight equity of Rs 80,000 per unit.

The commission charge will be Rs 1000 and VAT.

Similarly, the contract symbol for natural gas is NATURAL GAS and Comen is launching NG/APR/10 contract. According to Comen, the trading unit is 1250 mmBtu and the base price will be displayed per mmBtu.

"The intra-day margin is Rs 30,000 per unit with an overnight equity of Rs 60,000 per unit," it added. The commission charge will be Rs 1000 and VAT.

"We also remind our customers that these two contracts are subject to cash settlement," Satyal added.

Developing economies need better policy

Taming volatile price shifts for crude oil and other raw materials that many developing countries export and depend on for economic growth will require a better mix of policies and market mechanisms by governments, producers, those involved in international financial and credit markets, and others, according to speakers at UNCTAD's inaugural Global Commodities Forum this morning.

UNCTAD Secretary-General Supachai Panitchpakdi, opening the two-day conference, said over 85 developing countries depend on commodities for more than 50 per cent of their export earnings. The commodities boom that began in 2002 after more than two decades of declining prices raised hopes that such nations could reinvest climbing profits into reducing poverty and diversifying their economies, he said -- but then the boom turned to bust as the global recession struck in 2008.

Prices are only now beginning to recover, Supachai said, and immense challenges remain for commodity-dependent countries seeking to meet the Millennium Development Goals and other poverty-reduction targets. In addition to seeking ways to increase stability in commodities markets, he said the Forum will highlight how countries -- both importers and exporters -- can limit their exposure to commodity price volatility and mitigate the detrimental effects of commodity price swings.

The Forum will also address other pressing issues in the sector, including recent developments in the extractive industries; investment in improving the productive capacities of the commodities sector; options for mitigating risks in commodities production and trade; commodity finance and related legal issues; and policy options for minerals and metals producers.

Jean Feyder, Ambassador of Luxembourg and President of UNCTAD's Trade and Development Board, told the meeting that the Forum, or GCF, is intended to provide a neutral, high-level platform for reaching a convergence of views on price volatility and other commodities issues. The relationship between commodities exports and prices and poverty reduction also must be discussed, he said.

Mohamed Saleh Al-Sada, Minister of State for Energy and Industry Affairs of Qatar, said the price of oil, despite the best efforts of the Organization of Petroleum Exporting Countries (OPEC) to stabilize it, had tripled to over US$ 145 per barrel in July 2008 and then had fallen to less than $40 per barrel six months later. Since then, prices had recovered to about $70-80 per barrel. Speculation in commodities markets had contributed to the price swings, and speculation thrives on uncertainty, he said. Transparency in production and pricing can reduce the opportunity for such exploitative practices. What is needed are prices high enough to provide for economic growth and ensure long-term investment to ensure future supplies. Disparities between oil and gas prices also need to be addressed, the Minister said.

Germanico Pinto, Minister of Non-Renewable Natural Resources of Ecuador, and President of OPEC, said petroleum markets are enduring a period of great uncertainty. The challenges are complex and international cooperation is vital, as the global economy, especially in the energy field, is thoroughly interconnected. Increased speculative activity has led to price fluctuations that do not reflect actual supply and demand, Pinto said. Any global energy dialogue must focus on security of energy demand and supply -- consumers must be certain that their needs for energy will be met, while producers must have sufficient certainty of demand that they can invest in harvesting future supply, he added.

Ali Mchumo, Managing Director of the Common Fund for Commodities (CFC), said the Fund now has 106 member countries, and its intent is to harvest stable development from commodities production and exports. The sector must be transformed to become a major contributor to poverty reduction. Many developing countries remain highly dependent on commodities exports, and hence are vulnerable to the price volatility that plagues the sector, he said. While using commodity exports for growth, such countries must eventually break away from their extreme dependence on the sector.

Richard H Jones, Deputy Executive Director of the International Energy Agency, said the agency was founded in 1974 in the immediate aftermath of the 1973 oil shock. Its main aim is to promote energy security, and its member countries maintain oil stockpiles so that supply can continue at times of uncertainty and disruption. Market transparency and openness are vital for taming uncertainty and limiting shifts in prices, he said, adding that the organization uses research and forecasts to help keep current situations clear and to give an indication of future supply and demand.

Marwa J Kisiri, Head of the Geneva office of the African, Caribbean and Pacific Group of States (ACP), said many ACP countries are highly dependent on commodity exports, and the long-term trend has been towards declining returns from the sector; supply-side constraints also hinder the growth prospects of such nations. A development perspective is vital if international efforts are to succeed in responding to the challenges facing commodity-dependent countries, he said, and a successful conclusion to the Doha "development round" of trade negotiations also is needed.

Pierre-Francois Unger, National Councillor and Head of the Department of Economy and Health of the Republic and State of Geneva, said a multi-disciplinary approach is needed for facing commodities problems, and Geneva , an international city, is a fitting location for the Forum. Geneva is one of the world's leading centres for commodities trading, especially oil trading, second only to London, Unger said.

GBOT to start live exchange in Mauritius from April

The first multi-asset derivatives exchange is going live in Mauritius from April.
The first of its kind of currency and derivatives exchange in this region – Global Board of Trade (GBOT) – plans to offer eight-currency pairs with the dollar as the base – including Kenyan shilling and Ugandan shilling.
Joseph Bosco, deputy managing director and Chief Operating Officer (COO) of GBOT thinks that the region, with all its natural resources and huge potentials, is slowly waking up. “The African region is coming out of its troubled past and realizing its real strength,” he said adding that GBOT offers the region a better platform to exploit its natural resources and commodities like sugar and coffee. “Cocoa and coffee from the African region and Mauritius sugar are the world class,” he added.
It also expects to trade futures contracts in zinc, copper, aluminium, nickel, gold, silver and platinum apart from coffee, sugar and maize as well as crude oil and carbon credits.
The exchange will trade in 14 commodities, such as precious metals, base metals and agricultural commodities and eight dollar-based currency pairs - including the Mauritius rupee, euro, yen and sterling.
A good futures market can also control volatility of currency. “We will offer them the required risk management mechanism to hedge themselves against uncertainty,” Bosco added. “The east African countries like Kenya and Uganda can benefit a lot from it.”
The African continent has lately been on the radar of global powers like China and India. “And Mauritius is the gateway for Africa to the rest of the world,” he said. The Indian Ocean island nation offers every facility for an investor and has a democratic framework with a strong judicial system. “Apart from that its tax structure is very much favourable to the investors,” he said adding that the companies based in Mauritius and trading on other parts of the world would get 80 per cent tax rebate. “On top of that the people of Africa trust Mauritius more than any other.”
GBOT's main promoter is India's Financial Technologies (FT) that is listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) of India.
The exchange that has invested around $20 million was looking to add options contracts in due course, apart from international stocks, bonds and IRFs. “But initially, we are looking at $1 billion to $1.5 billion per trading day for each of the two categories of products (commodities and currencies) from second year trade given a limitations in the region,” Bosco said adding that “though it would definitely go up by the time.”