NOC slashes price of petrol and diesel by Rs 3 per litre

Nepal Oil Corporation (NOC) has finally decreased the prices of petroleum products, after a pressure from the public.

According to the state oil monopoly, the price of petrol, diesel and kerosene has been reduced by Rs 3 per liter with effect from today midnight.

With the reduction, per liter of petrol will cost Rs 178 and per liter of diesel and kerosene will cost Rs 175. Earlier, the price of petrol was Rs 181 and diesel and kerosene was Rs 178.

The Indian Oil Corporation (IOC) has sent a new price list to NOC today after reducing the price of fuel. In its revised price list sent yesterday, the IOC has reduced the prices of petrol by Rs 6.90 per liter, diesel by Rs 12.31 per liter and aviation fuel by Rs 10.61 per liter. According to the revised price, the NOC earns profits of Rs 17 per liter and Rs 10 per liter, in petrol and diesel, respectively, a press note of the NOC reads, projecting that the NOC will earn a profit of Rs 2 billion in the next one month. NOC, however, has kept the prices of aviation turbine fuel (ATF) unchanged at Rs 190 per liter for domestic airlines and $1.645 for international carriers. Likewise, the price of liquefied petroleum gas (LPG) – popularly known as cooking gas –remains the same at Rs 1,800 per liter, the press note adds.

According to the an auto-pricing system, the NOC can increase the price of petroleum products, if the price in international market goes up, and vice versa. But the NOC – citing its earlier loss – has not been reducing the price of petroleum products, despite price decrease in the international market.

This time, the state oil monopoly has been forced to reduce the price due to public pressure. It has reduced the prices of petroleum products today after five months, though the fuel price in the international market has declined by more than 28 per cent.

Last time the NOC had revised the fuel prices was on July 4, when the price of petrol was increased to Rs 181 per liter, and diesel and kerosene was increased to Rs 172 per liter. Since then, the price of crude dropped to $80.86 per barrel from around $112 per barrel in the international market. 

But the NOC has been repeatedly claiming that it has been adopting the auto-pricing system since September, 2014. Breaching its own policy, the NOC has not been decreasing the price of petroleum products lately. It claims that it still owns Rs 19 billion to its supplier IOC. Despite selling in profits, how the NOC is in red is beyond the imagination that led to suspicion.

The NOC has also set up a price stabilisation fund to adjust the price, if it goes down. But the NOC is blamed for misusing the fund too. Consumer rights activists blame the NOC for passing the price burden (loss) to consumers as it failed to manage the public entity.

The government gives no ear to the rising petroleum prices, as it gets hefty taxes from the petroleum business that has not been regulated through an Act yet despite repeated pressure from the public. The government entity – NOC – is doing billions worth petroleum business without any Act, which is why the petroleum business is under scrutiny.

NOC refuses to reduce fuel prices citing losses

The state oil monopoly increases the price of fuel, if the price goes up but doesnot decrease the price, if it comes down, and claims to be implementing automated pricing system.

And its not for the first time, the Nepal Oil Corporation (NOC) has been doing this. On several occasions, the NOC has not reduced the price, when the price in the international market came down, but increased the price once it witnessed a rise in the international market.

The NOC get its price list twice a month from its sole supplier Indian Oil Corporation (IOC). The automated pricing system came into practice to adjust the price in the domestic market on the basis of the price list the NOC gets from IOC. But this time also, the NOC refused to reduce the price of petroleum products despite buying at cheaper rates from IOC.

Issuing a press note today, the NOC claimed that it is in no state to decrease prices as its accumulated losses have reached Rs 27 billion. But last month, the NOC posted a fortnightly profit of Rs 180 million.

“The corporation is unable to reduce the price according to the new price list it received on November 1, due to fluctuations in the price of petroleum products in the international market,” the press note reads, claiming that it has been operating at a loss for a long time. 

According to new price list sent by supplier IOC, the price of LPG – popularly known as cooking gas – has gone up, while the prices of petrol, diesel, aviation fuel and kerosene have gone down. 

According to the oil monopoly’s press note, the corporation will incur a loss of Rs 368.5 million in 15 days only from the sale of LPG. On the contrary, the corporation will make a profit of Rs 580 million in 15 days from the sale of petrol, diesel, aviation fuel and kerosene.

The ‘bankrupt’ NOC has been, however, blamed of funding political parties, and bigwigs at the cost of people, as according to senior bureaucrats. One of the managing directors (MD) of the NOC, Lok Krishna Bhattarai had refused to share the NOC’s profit with royal palace, almost two decades ago, and resigned. “The tradition still continues, though the royal palace has been replaced with political parties,” claims the retired officials of the NOC that has been a ‘milking cow’ for every political parties.

Petro-pipeline extention to Chitwan to cost Rs 4 billion

 Some 62 km long petroleum pipeline extension from Amlekhgunj to Chitwan is going to cost Rs 4 billion, though, the entire project, including building associated infrastructure, is estimated to be around Rs 14 billion, according to a feasibility study conducted by the Nepal Oil Corporation (NOC).

The government is planning to stretch the pipeline to Chitwan in the first phase, and to Kathmandu eventually. Currently, the 69-km cross-border pipeline from Motihari in India to Amlekhgunj is operational since last one-and-a-half year. 

A joint technical study team of NOC and its sole petroleum products supplier Indian Oil Corporation (IOC) has prepared the feasibility study that has suggested the extension of the pipeline from Amlekhgunj to Lothar in Chitwan. The team submitted the feasibility study report to the Ministry of Industry, Commerce and Supplies. 

The NOC has also started discussions regarding the investment and construction modality with the ministry as it doesnot have the technical expertise to build the project on their own. 

The ministry, however, said a decision regarding the construction and financial modality will be finalised next week by the cabinet.

According to the ministry, the same company that build the Motihari-Amlekhgunj pipeline could be awarded the project or it can be awarded to any other experienced company through an open bidding process.

The NOC, along with the pipeline, also plan to construct a modern depot in Lothar for oil storage. The depot in Lothar will have a capacity of more than 100,000 kilolitres. Currently, the NOC's total storage capacity across the country amounts to 71,000 kilolitres, enough to meet its requirement for less than a week.

The construction of the Motihari-Amlekhgunj pipeline has allowed NOC to save Rs 2 billion in freight charges so far. The NOC is able to save freight charges as it will not need to seek the services of tanker, after the construction of pipeline.

The pipeline currently brings diesel only, but the NOC plans to bring petrol too through the pipeline this year. The pipeline also helps in reducing petroleum leakage, theft and adulteration. According to the NOC, it spends around Rs 6 billion on transporting petroleum products through oil tankers annually.

Following the obstruction in petroleum supply during the four-and-a-half-months-long Tarai unrest in 2015, the government thought of expanding fuel storage capacity to meet domestic demand for at least three months.

Likewise, another team from Indian Oil Corporation (IOC), which built the Motihari-Amlekhgunj pipeline as a gift to Nepal, also conducted a survey for pipeline connecting Nepal Oil Corporation's depot at Charali in Jhapa with Siliguri, in West Bengal of India. The initial survey revealed that some 35 km of pipeline will be laid in Indian territory and 15 km on the Nepal side of the border.

Nepal imports petroleum products worth more than Rs 200 billion annually, except last fiscal year, when the entire country was under lockdown reducing the vehicular movement. However, Nepal's petroleum consumption has almost doubled in last five years, according to a report of the Central Bureau of Statistics. Nepal's total export receipt is not enough to pay for a single commodity petroleum product's import bill. 

Due to ever growing requirement, the government has also planned to extend the pipeline to Kathmandu.

NOC jacks up fuel prices

The Nepal Oil Corporation (NOC) has increased the price of petrol, diesel and kerosene by Rs 2 effective from Wednesday midnight.
“With this increment, petrol is priced at Rs 111 per litre while diesel and kerosene will cost Rs 100 in Kathmandu,” confirmed NOC spokesperson Birendra Goit. The NOC has made an adjustment based on revised rates forwarded by the Indian Oil Corporation (IOC) – the sole supplier of the fuel to the NOC – today.
However, the price of cooking gas and aviation fuel remained unchanged, he said, adding that the price of petroleum products in places close to Nepal-India border areas will be slightly lower compared to the prices in Kathmandu valley.
Earlier, on December 17, the NOC had raised the price of diesel and kerosene by 1 rupee per liter each, while keeping the petrol price unchanged. But on December 2, the prices of petrol, diesel and kerosene were hiked by Rs 2 per liter each.
After lowering the price by Rs 2 per liter on September 10 – after the formal launch of the Motihari-Amlekhgunj, India-Nepal cross border petroleum pipeline – the NOC has already raised the price of petrol by Rs 4 per litre.

NOC jacks up petrol, diesel, kerosene prices by Rs 2 per litre

Though, the price of petroleum products have been decreasing in the international market, the state oil monopoly has increased the price of petrol, diesel and kerosene by Rs 2 per litre effective from midnight.
Nepal Oil Corporation spokesperson Birendra Goit confirmed that petrol will cost Rs 109 per litre, while the price of diesel and kerosene has been adjusted to Rs 97 per litre effective from tonight. “The prices were adjusted with the increase in fuel prices in the internal market.”
The NOC, however, claimed that the raise in retail prices of petrol, diesel and kerosene is in line with the revision in the price list forwarded by the Indian Oil Corporation (IOC) – the sole supplier of petroleum products to Nepal.
The NOC increased the prices of petrol, diesel and kerosene nearly three months after lowering their price. Earlier on September 10 – coinciding with the formal launch of the India-Nepal cross border petroleum pipeline (Motihari-Amlekhgunj – it had lowered the price of petrol, diesel and kerosene by Rs 2 each.
On September 20 again, the NOC has slashed the price of liquefied petroleum gas (LPG) – popularly known as cooking gas – by Rs 25 to Rs 1,350 per cylinder. Likewise, it has also lowered the price of ATF by $50 to $1,000 per kiloliter (kl) as an incentive for international airlines on the eve of Visit Nepal Year 2020 (VNY2020) campaign, and also in the wake of growing complaints from airlines companies that the fuel in Nepal was very expensive.

Fossil fuel still accounts for one fifth of total import bill

Despite smooth electricity supply, country’s dependency on fossil fuel has not decreased. “The share of import bills of petroleum products still accounts for 20 per cent of the total import bill worth Rs 207.41 billion,” according to the central bank.
According to Current Macroeconomic Situation of three months, Nepal paid Rs 41.36 billion – during mid July-mid October of the current fiscal year – for petroleum import, Rs 8.22 billion less, from Rs 49.58 billion in the same period of the last fiscal year 2018-19.
But the import bill of petroleum products drop is not due to less consumption rather due to falling price in the international market that determines the price in the domestic market. Nepal spent 16.6 per cent less in import of petroleum products – in the first three months of the current fiscal year 2019-20 compared to the same period last fiscal year – though the import value has increased by 7 per cent.
Though, the import bill – in monetary value – has dropped, the consumption volume has gone up, according to the data of Nepal Oil Corporation (NOC) that revealed that the import volume of fuel including petrol, diesel, kerosene, air turbine fuel and cooking gas increased to 789,144 kiloliters (kl) from 736,105 kl in the same period of the last fiscal year.
The import value is down also due to the variation of the exchange rate of the Nepali currency against the US dollar. The price of the petroleum products depends on the price in the international market.
According to the NOC, price of crude oil in the international market had swelled to $86 per barrel in October from $65 per barrel last July. However, the petroleum prices in the same period this year dropped to around $67 per barrel.
Though, the monetary value of import is less, the volume – especially of diesel – has not gone down. Demand for diesel is rising in the recent days due to construction-related works in hydropower projects unlike the demand from industrial sectors earlier, according to state oil monopoly. “In the first quarter, import of petrol increased to 183,026 kl from 160,846 kl, diesel increased to 412,563 kl from 393,601 kl while import of cooking gas also surged to 127,628 tonnes from 116,546 tonnes in the same period of the last fiscal year,” the NOC data revealed.

Fuel prices drops after cross-border petroleum pipeline comes into operation

Nepal Oil Corporation (NOC) has reduced the price of diesel, petrol and kerosene by Rs 2 per liter effective from today noon.
The state-owned oil monopoly confirmed that after the decision to lower the price of the petroleum products, petrol will cost Rs 107 per liter in Kathmandu valley, while diesel and kerosene will cost for Rs 97 per liter each. “The decision to revise price downward has been taken after formal launch of the India-Nepal cross border petroleum pipeline from Motihari to Amlekhgunj,” the NOC said, adding that the prime ministers of Nepal and India jointly inaugurated the cross border petroleum pipeline today morning.
Jointly inaugurated by Prime Minister KP Sharma Oli from Kathmandu and Indian Prime Minister Narendra Modi from New Delhi through a remote control, the 69-kilometer petroleum pipeline has helped reduce the price of petroleum products as expected, the NOC said, adding that supply of fuel from the pipeline is estimated to save Rs 2 to Rs 5 per liter in transportation cost, apart from the guarantee of smooth supply and efficiency.
The first cross-border petroleum pipeline in South Asia can pump NOC, however, has also attributed the reduction in petroleum prices to downward revision in prices in the international market, savings from the supply of fuel through the newly inaugurated cross-border pipeline and fluctuation in foreign currency exchange.
NOC – issuing a press note today – said that the price has been revised according to its 'automated pricing mechanism' system. Under the mechanism, NOC revises the fuel prices in line with the fluctuation of prices of petroleum products in the international markets, based on the price it receives from its sole supplier Indian Oil Corporation (IOC).

NOC hikes petro price

Nepal Oil Corporation has jacked up price of petroleum products effective from midnight.
According to NOC spokesperson Birendra Goit, the corporation has increased Rs 2 per litre in petrol, Rs 1.50 per litre in diesel and kerosene, and Rs 25 per cooking gas cylinder. "As per the new price, petrol will be available on Rs 100, diesel on Rs 75.50 and a cooking gas cylinder on Rs 1350," he added.
Since Nepal has been importing petroleum products from the Indian Oil Corporation (IOC), NOC fixes price of the petroleum products based on price list sent in by the IOC on 1st and 16th of every Gregorian month.
The government owned oil monopoly said that it has increased the price of petrol, diesel and kerosene and liquefied petroleum gas – popularly known as cooking gas – today as the price of the crude oil in the international market has seen increament. "We had to adjust the prices of other products due to increment in prices in the international market," he added.
NOC has, however, has not changed the price of aviation fuel. 
Even with the increment in the price of petroleum products, NOC will make profit of only Rs 19.70 million due to heavy loss in cooking gas, the NOC claimed, adding that it bears Rs 115 million loss per month even after implementation of the new rate.
Though, NOC has adopted automatic pricing system to adjust price of petroleum products according to the international price, it has not changed the fuel price since February.

Petroleum dealers threaten to stop supplying fuel

The Valleyites could again face the shortage of petroleum products' supply from July 4 due to the row between petroleum distributors and Nepal Oil Corporation (NOC) over loss compensation.
The Bagmati Petroleum Dealers’ Association – an association of around 300 fuel stations in Kathmandu Valley and neighbouring districts Kavre, Sindhupalchowk, Nuwakot, Rasuwa and Dolakha – today announced that it would stop purchasing petrol from NOC from July 4, against the Essential Commodities Control (Authorisation) Act.
Though the Essential Commodities Control (Authorisation) Act has listed petroleum products as essential commodity, the dealers have been repeatedly violating the law by protests and strikes in supply of essential commodities.
"We will not sell petrol from our member fuel stations in Kathmandu Valley and neighbouring districts from July 4,” said president of Bagmati Petroleum Dealers’ Association Achyut Bahadur Khadka.
Fuel stations have been facing loss of around 99 litres on the purchase of 4,000-litre tanker from NOC after it started supplying Euro IV standard petrol from the first week of April, he said, adding that NOC allows deduction of only 35 litres to make up for the loss for every 4,000 litres of petrol and 26 litres deduction for the same volume of diesel. "We have been facing higher loss than what NOC permits us to make up as loss."
NOC pays compensation for 35 liters per chamber as technical loss. But dealers say they have been seeing losses of up to 99 liters per chamber.
Earlier in April, a joint study team of NOC, Nepal Petroleum Dealers Association, and Nepal Bureau of Standard and Metrology had found that tankers were supplying 84 to 99 liters less fuel per chamber. Petroleum tankers have four to five such chambers. Such huge losses were found in tankers that ferried fuel from NOC' Thankot depot to different fuel stations.
Bagmati Petroleum Dealers’ Association has been – for the last two months – demanding that NOC raise the loss quantum. The dispute between the petroleum distributors and NOC has now come to the fore with dealers announcing they will stop purchasing and selling from July 4.
"Dealers are planning to stop distribution to get their demands fulfilled," said spokesperson of the NOC Sitaram Pokharel. "It will hurt the general public," he said, adding that the NOC has raised the loss quantity from 22 litres to 35 on supply of every 4,000 litres of petrol and from 17 to 26 litres for diesel from last August 1. NOC has urged dealers to check the quantity while loading from the depot.
The NOC has, meanwhile, formed a panel led by director general of Nepal Bureau of Standards and Metrology Bishwo Babu Pudasaini to study the loss to resolve the crisis with dealers.
"NOC may review the loss make-up facility only after the panel submits a report,” Pokharel said, adding that the dealers have, however, alleged that the panel will deliberately delay submission of the report.

NOC can import LPG from other countries

Nepal will be able to import cooking gas from countries other than India very soon.
A new clause is being inserted in the petroleum supply agreement to be signed between Nepal Oil Corporation (NOC) and Indian Oil Corporation (IOC), which is due for renewal this month.
"As the demand for cooking gas has been increasing by 20 per cent annually in India, we are including a provision that allows Nepal to import liquefied petroleum gas (LPG) from other countries as well," deputy executive director of NOC Sushil Bhattarai said at a meeting of Industry, Commerce and Consumer Welfare Committee of the parliament today. He also said that the IOC has also agreed to include such provision in the agreement. "The agreement after renewal allows Nepal to import cooking gas from other countries," he added.
Nepal currently imports around 30 tonnes of LPG from India every month.
Speaking at the meeting, NOC managing director Gopal Khadka said that the draft agreement also includes a provision that allows NOC to buy crude oil and give it to Indian refinery for processing, should IOC fail to supply fuel to Nepal as per the demand. However, NOC failed to incorporate the provision of compensation, in case IOC fails to maintain the smooth supply of petroleum products like last year during the Indian blockade for nearly six months.
The parliamentarians, on the occasion, directed the NOC to include a provision of compensation in the new Supply Agreement – since it is a commercial agreement – that would require IOC to compensate NOC at times of supply disruption from the IOC side.
"The new Supply Agreement should be signed in such a manner that it ensures uninterrupted supply from IOC to Nepal even during difficult times," coordinator of sub-committee Subash Chandra Thakuri said, adding that provision of compensation in the agreement itself will compel IOC to make supply regular.
NOC had not only incurred huge financial loss – amounting to billions of rupees – due to almost six months-long disruption in supply of petroleum products to Nepal from IOC last year, but the economy also suffered.
The NOC had then also written a letter to IOC seeking compensation for the financial loss that it incurred due to fuel supply disruption. The IOC had, however, remained mum back then.
The sub-committee also directed NOC to keep enough space in the agreement that would allows NOC to sign commercial petroleum deal with other nations and import fuel from other sources at times of difficulties. "Along with IOC, NOC also should sign commercial petroleum deals with other feasible nations,” Thakuri said, directing NOC to expedite the process of signing commercial fuel deal with China.
Though NOC and PetroChina of China had signed a memorandum of understanding a year ago to engage in commercial petroleum deal, they have not been able to materialise the historic deal that would break IOC’s monopoly in petroleum supply to Nepal.
A team from IOC had visited Kathmandu last week to hold discussion with the NOC team on the new agendas that are being included in the agreement.
The existing agreement was signed in 2012.
After the Indian blockade that ran for nearly six months, NOC is under pressure to include some provisions, including allowing Nepal to import petroleum products from other countries, compensation to NOC, if IOC failed to supply petroleum products as per the demand, in the draft. But the draft has not included these provisions, despite pressure from all quarters.
Addressing the meeting, Khadka said that the draft of the new Supply Agreement with IOC has introduced a provision that allows NOC to procure fuel from third country in case IOC is unable to supply petroleum products to Nepal as per demand.
Meanwhile, Khadka said that commercial fuel trading with China and other countries is only possible through government-level agreement. "If we are to diversify our petroleum trade, the government should hold government-to-government talks with governments of different countries," he said, hoping that the visit of Prime Minister Puspa Kamal Dahal to China next week will expedite the process for Nepal-China commercial fuel trade deal.
However, NOC has included some provisions like reducing marketing charge that IOC has been levying on fuel supplied to Nepal from 2.5 per cent to 2 per cent. It is expected to reduce NOC's cost of import by more than Rs 1 billion every year.
The review meeting of Supply Agreement between IOC and NOC held last week had decided to reduce the marketing charge in the new agreement that comes into effect from April 1.
The new agreement will be in force until March 31, 2022.
The new agreement also allows Nepal to import fuel from third countries if IOC is unable to ensure regular supply of petroleum products to Nepal.
Likewise, IOC has also agreed to waive off interest levied on NOC for delay in payment. NOC makes payment to IOC twice a month, on 8th and 23rd day of every month. IOC had been slapping penalty for every day in case of delay in payments.

Consumer body flays decision to hike cooking gas price

Consumer rights activists today urged the government to roll back its recent decision to hike price of cooking gas. Submitting a memorandum ot the Prime Minister Puspa Kamal Dahal at his office, National Consumers Forum (NCF) has also condemned the decision to hike price of liquefied petroleum gas (LPG), popularly known as cooking gas.
The forum has demanded that the government rollback the decision immediately. "The decision has hit consumers hard as the price of cooking gas has been increased twice in the past one and half months," it said in a press note. The government fuel monopoly has jacked up the price of cooking gas by Rs 25 per cylinder on Friday citing price hike in the international market.
The country is observing the World Consumer Rights Day on February 15. And the government and various organisations working for consumer rights have announced series of programmes to mark the World Consumer Rights Day.
But on one hand, the government talks about safeguarding the rights of the consumers and on the other hand it increases price of essentials like cooking gas when the World Consumer Rights Day is just around the corner, the consumer right activists blamed.
According to president of National Consumer Forum (NCF) Prem Lal Maharjan, the government should review its decision before announcing any awareness programmes targeting the World Consumer Rights Day.
He also threatened the government that consumer rights activists would boycott all government events to mark the World Consumer Rights Day, if the Supplies Ministry does not bring down the price of cooking gas as soon as possible.
As NOC has been logging profit in recent months, the decision to increase price cannot be justified,” the memorandum to the premier reads.
The forum has also argued that the intention behind increasing price of cooking gas is to fleece consumers.
Cooking gas now costs Rs 1,375 per cylinder.
The NOC had claimed that the price of cooking gas was increased because its sole supplier – Indian Oil Corporation (IOC) – increased price of the cooking gas. "NOC will suffer loss of Rs 291.50 per cylinder even after the fresh adjustment in price," according ot the corporation.
According to the new rates forwarded by IOC, the corporation would have suffered loss of Rs 313.51 per cylinder, had it not hiked the price.
NOC, however, has kept the price of diesel, petrol and kerosene unchanged. Earlier in February also the NOC had increased the price of cooking gas by Rs 25 per cylinder, citing price hike in the international market. The NOC is logging profits in sale of petrol, kerosene and aviation turbine fuel, while it is suffering loss in diesel and cooking gas, it claimed.
The corporation however has been selling petrol at a profit of Rs 1.23 per liter in March, while it has been facing loss of Rs 4.07 per liter in diesel. NOC has also claimed that it will suffer a loss of Rs 414.4 million in March.

Cooking gas price up by Rs 25 per cylinder

Claiming that it is in loss on cooking gas, Nepal Oil Corporation (NOC) has increased the price of Liquefied Petroleum Gas (LPG) by Rs 25 per cylinder.
LPG – popularly known gas cooking gas – will cost Rs 1,375 per cylinder from tonight, according to NOC spokesperson Sita Ram Pokharel.
This is the second time the NOC has raised the LPG price in the last one-and-a-half months. NOC had increased LPG price by Rs 25 per cylinder on February 2 also.
In the new price list, the sole supplier of the petroleum products to NOC – Indian Oil Corporation (IOC) – has increased LPG price by Rs 122 per cylinder. "With this adjustment in price, NOC has to bear a loss of Rs 333 on the sale of each cooking gas cylinder,” he added. "But the price increment, NOC will still suffer loss of Rs 291.50 per cylinder in a month."
The fresh upward adjustment in price has been made due to price movement in the international market, he said, adding that the corporation had to increase price of LPG after IOC increased price of the popular cooking fuel. "With the revised price, the loss has come down to Rs 288.51 per cylinder."
NOC, however, has kept the price of diesel, petrol and kerosene unchanged. The state oil monopoly is logging profits in sale of petrol, kerosene and aviation turbine fuel, while it is suffering loss in diesel and cooking gas. The corporation is making profits on other petroleum products – Rs 1.23 per litre on petrol, Rs 13.05 per litre on kerosene and Rs 13.01 per litre on aviation turbine fuel – though it claims to be incurring a loss of Rs 4.07 per litre on diesel.

Maintain fuel storage to meet 90 days' demand, PM tells NOC

Prime Minister Pushpa Kamal Dahal has directed the officials concerned to maintain storage of petroleum products to meet the demand for 90 days.
Speaking at a meeting with the officials of the Supplies Ministry, Finance Ministry and Nepal Oil Corporation (NOC) at his office today, Dahal assured that the government would provide necessary budget to build petroleum storage facilities. He also directed the officials to extend the Raxaul-Amlekhgunj petroleum pipeline up to Chitwan.
On the occasion, officials of the Ministry of Supplies officials requested the PM to allocate Rs 57 billion for building petroleum storage facilities. "The total cost of expansion of petroleum storage facilities is estimated at Rs 117 billion," briefed supplies minister Deepak Bohara to the Premier on the occasion. "The government should provide us Rs 57 billion as we don't have sufficient budget to build storage facilities," he said, adding that the ministry sought budget as the NOC is planning to build one storage facility in each of the seven provinces. "The NOC is planning to build storage facilities under public-private partnership."
The budget includes both for building of petroleum storage infrastructure to cater the demand of at least three months and also to purchase petroleum products – petrol, diesel, kerosene, LPG – that will remain in stock for the same period.
The Finance Ministry has also principally agreed to support Supplies Ministry to expand petroleum storage facility by releasing the required budget.
Nepal currently has reserve capacity of 5,184 kilolitres (kl) petrol, 42,400 kl diesel, 15,500 kl kerosene and 8,500 kl aviation turbine fuel (ATF). This storage is able to fulfil the domestic demand for three to four days. If fuel storage capacity is to be increased targeting three month’s consumption in Nepal, the current reserve capacity of petrol has to be expanded to 135,000 kl and that of diesel to 405,000 kl, according to NOC.
Similarly, reserve capacity of kerosene and ATF has to be upgraded to 5,100 kl and 60,000 kl, respectively. Also, LPG reserve capacity has to be increased to 120,000 metric tonnes to meet three month’s demand.
As NOC's existing storage facility can meet the demand of few weeks only, long queues can be seen in petrol pumps, if fuel supply is affected for even a day.
While NOC has sought Rs 57 billion for build petroleum facilities, it is preparing to distribute Rs 1.14 billion worth of bonus to its staffers. A source at the NOC said that the petroleum monopolist was preparing to distribute after the corporation became debt-free this year.
Last year, NOC had set aside Rs 900 million to distribute bonus among its staffers.
However, its plan could not materialise as the Finance Ministry and Supplies Ministry directed it to repay the loans first. This time around, NOC has allocated Rs 2 billion for bonus. But it knocks the doors of the government whenever, if faces loss.
Likewise, NOC also collects millions of rupees from customers in the name of Infrastructure Fund. But it does not spend the amount thus raised for infrastructure development rather has been paying government loan to become debt-free so that it can distribute bonus to the staffers.

Petroleum pipeline project gathers momentum

The much-talked about petroleum pipeline project has gathered momentum after a brief halt due to last year's economic blockade.
Construction of the pipeline project is expected to begin from December, according to the Nepal Oil Corporation (NOC).
The Raxual-Amalekhgunj Petrol Pipeline project has gathered momentum as its detailed project report has been finalized by Indian Oil Corporation (IOC) and NOC joint team in New Delhi. A team led by NOC executive director Gopal Khadka is in New Delhi to finalise the detailed survey report.
Indian prime minister Narendra Modi had promised to expedite the project during his visit to Kathmandu in August last year. However, the project had become uncertain because of the economic blockade imposed by India following promulgation of the constitution a year ago.
"The uncertainty has finally ended as NOC and IOC have already completed the detailed survey study of the project,” an NOC official said from New Delhi. "Construction woks will complete within a year."
The length of the pipeline, however, has decreased after the detailed survey. Earlier, the length of the pipeline was estimated at 41 km. However, the recent study showed that the pipeline will be 37.6 km long.
The joint study has also estimated the project to cost at Rs 4.40 billion. India will invest Rs 3.20 billion, while Nepal will chip in Rs 1.20 billion, according to the study.
“The construction will start soon,” a deputy director said, adding that IOC engineers have completed the study, making the project viable. He said that the IOC has asked the Nepali side to help clear physical structures and trees along the proposed sites.
Around 13,000 trees have to be cleared along the proposed pipeline, according to the survey. Similarly, some electric poles and transmission lines also need to be relocated.
The NOC team will also request the IOC to increase the capacity of the pipeline as the demand for petroleum products in Nepal is increasing by 14 percent annually in recent years. Some 1500 tankers have been ferrying petroleum products from India to Nepal at present. Once the pipeline is ready, the transport cost is expected to come down making the petroleum products cheaper. Similarly, it is also expected to ensure regular supply of petroleum products.
According to officials, the pipeline can pump 3,000 kiloliters of petroleum products at a time.
Meanwhile, NOC and IOC will also review the petroleum products agreement signed in 2012. The agreement has to be reviewed every five years.

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.

Third country trade triples in wake of Indian blockade

The economic blockade by India has hurt the southern neighbour also as Nepal's trade direction has changed in favour of third countries. Though India's share in Nepal's total foreign trade is still half, the trade with third countries other than China and India has tripled, whereas the trade with India and China has decreased, according to the Department of Customs.
According to the department, the share of trade with third countries was 11 per cent in the first five months of last fiscal year. The figure has jumped to almost triple to 31 per cent, in the corresponding five months of the current fiscal year of 2015-16.
Director general at the department Shirsir Dhungana says that the squeeze in the volume of trade with India and drop in the total trade volume have changed the trade direction scenario. He also attributed the growth in third country trade to the use of the Birgunj dry port. "We have been able to bring the dry port into operation from November 1," he said, adding that the government sent some 14,000 loaded trucks out of the country, and this has contributed to the third country trade. "Likewise, Tribhuvan International Airport (TIA) – yet another trade point for third countries – has also been operating smoothly."
Nepal's trade with India dropped to 54 per cent in the first five months of the current fiscal year from 65 per cent in the same period last fiscal year. Likewise, the trade with China has decreased to 15 per cent in the first five months from 24 per cent in the same period last fiscal year, the data revealed.
The devastating earthquakes on April 25 and May 12 damaged the only trade route to China through Tatopani customs, which is attributed to the drop in trade with China. The other trade route with China, Kerung, has also not been fully operational due to the earthquakes and also due to lack of physical infrastructure, including roads on the Nepal side. The government's apathy in developing the infrastructure including road leading to Kerung is the key concern in drop in trade with China.
But the Indian economic embargo has directly hit the trade with that India itself. Immediately after the promulgation of the new Constitution on September 20, the Tarai-Madhes-centric parties started agitations in the plains, and the southern neighbour, in order to support them, stopped cargo movement through Birgunj customs, which sees the bulk of Nepal's total trade with India. The drop in trade with India through Birgunj-Raxual customs – that contributes 70 per cent to the international trade – has also hit the revenue. The state coffer has lost Rs 50 billion in revenue in the first five months of the current fiscal year, according to the Finance Ministry.
The embargo has in particular hit the smooth supply of petroleum products – Nepal's major import from India – that constitutes almost one fourth imports from India. The drop of petroleum products import to 32 per cent, according to department data, has not only hit the trade with India but the day-to-day life in the country has also become difficult due to lack of fuel. Nepal imported Rs 110 billion worth of petroleum products from India in the last fiscal year, according to central bank figures.
Though, trade analysts claim that the current trade direction would not be sustainable once India lifts the blockade, the trade diversification and customs diversification is key lesson that Nepali policy makers, politicians and development strategists should understand. Sooner they understand, better will be the future of the countrymen.

नेपालीको क्रयशक्ति घट्दै, गरिबी बढ्दै

भारतले एक महिना अघिदेखि गरेको नाकाबन्दीका कारण नेपालीको क्रयशक्ति घटेको छ। नाकाबन्दीले निश्चित आम्दनी भएका, दैनिक ज्यालादारी तथा करारमा रहेका कामदारले आम्दानी मात्र गुमाएका छैनन्, चर्को मूल्यमा उपभोग्य वस्तु खरिद गर्न पनि उनीहरू बाध्य छन्।
आपूर्तिजन्य अवरोधका कारणले पेट्रोलियम पदार्थ तथा दैनिक उपभोग्य अत्यावश्यक वस्तु तथा सेवा उपलब्ध नहुँदा एकातिर मूल्यवृद्धि भएको छ भने अर्कोतिर निश्चित आम्दानी भएका, दैनिक ज्यालादारी तथा करारमा रहेका कामदारहरू काम नपाएर बेरोजगार हुनाले उनीहरूको आम्दानी घटेको छ। पूर्व अर्थसचिव रामेश्वर खनालका अनुसार यी दुवै कारणले नेपालीको क्रयशक्ति घटेको छ।
त्यस्तै, आपूर्तिजन्य अवरोधका कारण बजारमा कालोबजारी झन् बढेको छ। साधारण नागरिक हाल एक लिटर पेट्रोललाई ५ सय रुपैयाँसम्म तिर्न बाध्य छन्। त्यस्तै, व्यवसायीहरूले एक सिलिन्डर खाना पकाउने ग्यासलाई १० हजार रुपैयाँसम्म तिरेर पनि होटल सञ्चालन गरिरहेका छन्।
पूर्व अर्थसचिव खनालका अनुसार भूकम्पले विनाश भएका भौतिक संरचना त फेरि बनाउन सकिछ, तर हालको नाकाबन्दीले भने समग्र रूपमा नेपालीको आम्दानी घटाएको छ। 'लम्बिँदो नाकाबन्दीले गरिबीको रेखामुनि रहेको वर्ग सबैभन्दा बढी पीडित भएका छन्,' खनालले भने, 'भर्खर गरिबीको रेखाबाट माथि उठेको वर्ग पनि नाकाबन्दी कारण फेरि गरिबीको रेखामुनि झर्छ।'
आपूर्तिजन्य समस्या तत्काल समाधान भएर बजारमा वस्तु सहज रूपमा पाइन थाले पनि रोजगारी गुमाएकाहरूले तत्काल रोजगारी पाउने सम्भावना कम रहेकाले भारतको नाकाबन्दीले अर्थतन्त्रलाई दीर्घकालीन रूपमा अपूरणीय क्षति भएको खनालको भनाइ छ।
राजनीतिक नेतृत्व पूर्ण रूपमा बहिरो र अन्धो भएकाले विगत १०–१५ वर्षदेखिका योजना तथा रेमिटेन्सले धानेको अर्थतन्त्र विस्तारै 'कोल्याप्स' हुने बाटोतिर गइरहेको र देश असफल राष्ट्रतिर उन्मुख भएको वरिष्ठ अर्थशास्त्री विश्वम्भर प्याकुरेलको विश्लेषण छ। आपूर्तिजन्य समस्याले जनताको दैनिक जीवन संकटमा पर्दा पनि सरकार कानमा तेल हालेर बसेको भन्दै उनले सरकारको वैधानिकताको पनि संकट रहेको बताए।
'आपूर्तिजन्य समस्याका कारण बढ्दो मूल्यवृद्धि, घट्दो उत्पादकत्व तथा सरकारको वैधानिकताको संकटले नेपाल असफल राष्ट्रतर्फ उन्मुख भएको छ,' उनले भने, 'सरकारले जनतामा विश्वासको वातावरण बनाउन पनि सकेको छैन।'
यस्तै, तराई–मधेसकेन्द्रित दलद्वारा गरिएको आन्दोलनले तराई–मधेसमै चरम गरिबी बढ्ने देखिन्छ। प्याकुरेलका अनुसार स्रोतसाधनलाई बजारमा लगेर बेचेपछि मात्र त्यसले मूल्य प्राप्त गर्दछ। तर हालको आन्दोलनले तराई–मधेसका उत्पादनले पनि बजार नपाएकाले त्यहाँका जनता झन् गरिबीको चपेटामा पर्ने निश्चित छ। विश्व बैंकका अनुसार हाल नेपाल दक्षिण एसियामा तेस्रो गरिब मुलुक हो तर वैशाखको शक्तिशाली भूकम्प तथा हालको नाकाबन्दीले नेपाल दक्षिण एसियाकै सबैभन्दा गरिब मुलुक हुने सम्भावना बढेको पनि उनले बताए।
यसैगरी, भूकम्पले ७ खर्ब ५० अर्ब तथा हालको नाकाबन्दीले करिब त्यत्तिकै बराबरको क्षति भएको भन्दै उनले यी दुई घटनाले नेपालको अर्थतन्त्र बराबरको क्षति भएको बताए।
'नेपालको समग्र अर्थतन्त्रमा काठमाडौंको योगदान ३० प्रतिशत रहेकाले पनि हालको नाकाबन्दीले काठमाडौं बढी प्रभावित हुँदा देशको समग्र अर्थतन्त्रमै यसको असर पर्छ,' प्याकुरेलले भने।
नाकाबन्दीका कारण सिर्जित दैनिक उपभोग्य वस्तुको अभावदेखि घट्दो उत्पादन, अर्थतन्त्रमा दीर्घकालीन प्रभाव पार्ने राष्ट्रिय गौरवका आयोजनाको काम ठप्प, शिक्षा र स्वास्थ्य जस्ता मानवीय सम्पत्तिमा नकारात्मक प्रभावले दीर्घकालीन रूपमा अर्थतन्त्रको ढाड भाँच्ने राष्ट्रिय योजना आयोगका पूर्व सदस्य चन्दमणि अधिकारी बताउँछन्। 'नेपालले भारतप्रति अर्थिक तथा राजनीतिक रूपमा बढी नै निर्भर भएर सन्तुलित सम्बन्ध राख्न नसकेकाले अर्थतन्त्र धरासायी भएको छ,' उनले भने।

NOC calls bids from international fuel suppliers

After India refused to send the petroleum products to Nepal – since the last two weeks – Nepal Oil Corporation (NOC) has called global tender to supply fuel to Nepal.
A board meeting of NOC today evening decided to issue a public notice tomorrow calling for global bids from fuel suppliers for 15 days, a source at the state oil monopoly said requesting anonymity.
It is the first time in history that NOC has called global bids from international fuel companies for petroleum supply.
Despite four decades of commercial association and agreement with the Indian Oil Corporation (IOC) – the sole petroleum supplier to the NOC – the latter has failed to supply fuel to Nepal citing security reasons – due to protests in the Tarai-Madhesh – since the past two weeks. While responding to the NOC official's request, the IOC officials said that they have been told not to supply petroleum products to Nepal, though India claims to have not been imposed blockade on Nepal.
IOC has slashed the fuel supply to Nepal by over 90 per cent compared to normal times though NOC has not violated the contract with IOC. NOC and IOC had renewed agreement in 2012. It is valid till 2017. According to the commercial agreement between NOC and IOC, the latter will supply as much as petroleum products NOC needs.
Following the unofficial India-imposed economic blockade, the IOC has refused to supply fuel – including cooking gas – to Nepali tankers and bullets reached in the Indian depots.
Likewise, the Indian customs officials have also been preventing loaded fuel tankers from entering Nepal.
Reeling under acute shortage of petroleum products – after IOC's failure in maintaining smooth supply – NOC has been left with no option other than to call global bids. After the IOC's reluctance to supply fuel that has not only paralysed normal life but has also crippled the economy, the NOC has no option to call global tender, the official said, adding that the NOC is expected to select the fuel supplier to Nepal through a competitive bidding process."
An unofficial blockade by India restricting the flow of oil tankers and trucks into the country has also caused disruptions in transportation and made schools to shut down. Hospitals are also running low on medicine. There could soon be humanitarian crisis, if India does not lift its embargo.
The cabinet had this week directed, the Ministry of Commerce and Supplies, to explore the alternative, in case the IOC does not cooperate. The cabinet had asked the ministry to ease the supply of petroleum products – including aviation fuel, petrol, diesel, kerosene and LPG (cooking gas) for 15 days – as a temporary measure. However, it is high time, Nepal should think of long-term option as the political arm twisting of India through IOC has made the Nepalis suffer a lot. NOC took long time to come to conclusion and look for alternative also due to non-cooperation of the ministry that has never thought of easing supply during the crisis in the past too.
The state-owned oil monopoly has asked the interested bidders to submit their Expression of Interest (EoI) within three days. "NOC wants 200 kilolitre of diesel, 100 kilolitre of petrol, 200 kilolitre of ATF, 200 kilolitre of kerosene and 100 metric tonnes of LPG immediately for 15 days either through land or air route," the bid read.
Earlier this week, NOC had even sent a letter to IOC requesting immediate resumption of regular supply. But the IOC did not heed NOC's request forcing the latter to call for gloal tender to maintain fuel supply.

Government concerned over Indian blockade

Nepal has officially showed concern over 'India-imposed blockade' since last four days that has made the lives of Nepalis hard.
Foreign Ministry today – releasing a press note – said that the government is concerned over 'undue delay on the movement and clearance of cargo vehicles resulting in significant decrease in the flow of essential goods to Nepal from India via different border checkpoints for last few days.'
"It decreased flow has been noted particularly since September 23, whereas the security situation in Tarai has remained the same for more than a month and now has been improving gradually,” the ministry said in a statement.
Minister for Health and Population Khaga Raj Adhikari – who is officiating foreign
minister in an absence of foreign minister Mahendra Pandey – during his meeting with ambassador of India to Nepal at the Foreign Ministry in Singha Durbar yesterday, had informed about the fact and requested for necessary cooperation from Indian government for early release of cargo vehicles stuck at border checkpoints on the Indian side, according to the ministry.
A handful of vehicles – with perishable goods – were allowed to enter Nepal through Mechi and Dhangadhi check point. "Due to the blockade, Nepalis have begun to feel shortage of daily supplies on the eve of festive season,” the ministry said, further adding that as many as 29 cargo vehicles carrying perishable goods had managed to enter Nepal yesterday and the day before through Bhairahawa checkpoint.
The ministry also informed that 17 cargo vehicles, including three with petroleum products, through Mechi checkpoint and 25 cargo vehicles, including 20 with petroleum products, through Dhangadhi check point could enter Nepal, today.
"The situation of supply, however, has not improved ever since," it said, adding, "Not a single cargo vehicle could enter Nepal through Biratnagar, Birgunj, Bhairahawa, Krishnanagar and Nepalgunj checkpoints until 5 pm today."
India has – showing its displeasure over promulgation of constitution through Constituent Assembly (CA) on September 20 – blocked cargo vehicles, including petroleum products, despite agreement to supply petroleum products to Nepal Oil Corporation (NOC) by Indian Oil Corporation (IOC), the sole supplier of petroleum products to Nepal. India sent a 7-point recommendation to add in the constitution, which Nepali leaders rejected. The Indian bureaucracy has taken the issue as its prestige issue and entered into ego-war with a tiny landlocked neighbour Nepal.
"Hundreds of vehicles carrying petroleum products and other essential goods are awaiting clearance to enter Nepal on the Indian side of the border,” the statement added, “Tankers have not been filled up with petroleum products."
Large number of vehicles have not been allowed to enter the Indian side and due to which people in Nepali side have begun to feel shortage of daily supplies on the eve of festive season, the statement further read. "Given the friendly relations existing between the two countries, Nepal sincerely hopes that the India will take all necessary steps at the earliest to ensure uninterrupted entry of vehicles carrying essential supplies, including petroleum products, to Nepal as before. It also reiterated that there would not be any problem inside the Nepali territory for the transport vehicles and their personnel since arrangements are already in place for their security.
Though not permitting transit right to a landlocked country like Nepal is a breach of freedom of transit rights of landlocked countries. If India continues to impose embargo on Nepal, Nepal can lodge complaints in the multilateral trade mechanism as it is the right of landlocked country. The transit and free supply of consumables is Nepal’s right and India should facilitate it without any hindrance, according to the multilateral and bilateral agreement.

Country suffers over Rs 1.54 billion trade deficit every day

The country is suffering over Rs 1.54 billion trade deficit everyday.

According to the central bank data, the country suffered Rs 232.99 billion trade deficit in the five months of the current fiscal year 2013-14.

Likewise, trade deficit with India – the largest trading partner – increased by a 24.2 per cent compared to the same period of last fiscal year, it said, adding that trade deficit with third countries also went up by 15.4 per cent.

The country exported Rs 37.37 billion, whereas imported Rs 270.35 billion worth merchandise in the five months till mid-December.

Imports from India increased due to rise in import of petroleum products, vehicles and spare parts, thread and cold rolled sheet in coil, while rise in imports from other countries surged due to imports of crude soybean oil, silver, readymade garments and chemical fertilizers, the central bank added.

"Due to high growth of imports compared to exports, the ratio of export to import declined to 13.8 per cent in from 14.6 per cent of the same period last fiscal year's same period," it added.

As usual petroleum products stood as the largest import of the country with Rs 48.11 billion, against the country's total export receipt of Rs 37.37 billion.