Airlines jack up airfares due to fuel surcharge hike

Airline companies hiked the airfare by up to Rs 1,020 per travel citing recent increase in prices of petroleum products.

The Airlines Operators Association of Nepal (AOAN), confirming the increase in fuel surcharge, said that the one-way ticket of Biratnagar-Nepalgunj has been expensive by over Rs 1,000. as the airfare has increased from Rs 8,915 to Rs 9,935.

The state oil monopoly has increased the price of aviation fuel (domestic) by Rs 19 per liter and the aviation turbine (ATF) fuel for international by $100 per kiloliter, effective from Sunday midnight. With the revised prices, these aviation fuels now cost Rs 185 per liter for domestic and $1,645 per kl for international, respectively.

According to the rule, Rs 5 increase or decrease in ATF should adjust the fuel surcharge accordingly, which will impact the airfare directly.

So, the rate of mountain flight from Kathmandu now costs Rs 6,350 per flight, up from Rs 5,695, according to the AOAN. “Likewise, the airfare for Pokhara-Bhadrapur route has increased from Rs 6,720 to Rs 7,490 per travel.”

After Nepal Oil Corporation (NOC) raised the fuel prices, the land route transporters have also increased the transport fares of inter-provincial passenger and freight transport by up to 7.7 per cent.

Government cuts civil servants’ fuel allowances by 20 per cent

To reduce the fuel imports, the government has cut down fuel allowances of civil servants by 20 per cent. The reduction of import of petroleum products is expected to put less pressure to the depleting foreign currency reserves.

The Finance Ministry, sending a circular to all government offices on Monday, said that it is trying to reduce expenses incurred on fuel from Monday till three months, throughout the current fiscal year.

The ministry press note  reads that a cabinet meeting on Wednesday had decided to cut the expenses on petroleum products of all the government offices and public enterprises. 

The government move is expected to cut down the expenses on fuel to save the foreign currency reserve. “The government offices will have to spend only 80 per cent of their fuel budget,” a Finance Ministry source claimed, adding that the provision will, however, not applicable for the development projects, securities, essential services and those part of the local elections.

The government currently provides 207 liters of fuel to minister-level, 100 liters each to secretaries and 70 liters for joint secretary-level government employees. Nepal has imported around 200 billion worth petroleum products from India. But with increasing petroleum prices due to Russia-Ukraine war, the Nepal Oil Corporation (NOC) is bankrupt also due to free fuel to various former ministers and political cadres.

NOC’s profit increases by Rs 4 billion despite the pandemic

 Welcome to the journey towards socialism as the state-owned entity earns hefty profit – where consumers get nothing – and private enterprises are directed to share their profit and spend in corporate social responsibility (CSR).

The state-owned Nepal Oil Corporation (NOC) has earned Rs 12.87 billion profits in the last fiscal year 2019-20 – compared to Rs 8.75 billion profit in the fiscal year 2018-19 – though consumers get nothing from the hefty profit of the state-oil monopoly.

The corporation last fiscal year paid Rs 66.88 billion as revenue – by trading fuel – to the government. It has last fiscal year imported 2.5 million kiloliters (kl) of fuel worth Rs 205 billion, which is 11 per cent less than a fiscal year ago. “Of the total collected taxes under different headings, the NOC has collected Rs 4.99 billion from consumers as road maintenance charge in a period of five years. Likewise, Rs 2.94 billion has been collected as pollution tax and Rs 13.98 billion as infrastructure development tax, which all went to the government coffer.  

The state-oil monopoly attributed increase in profit to savings in transportation cost by importing fuel from cross country petroleum pipeline – the first one in the South Asia – and also earnings from the interest on the previous year's profit.

Most of the trade and businesses were hit by the corona pandemic as the country came to a standstill for four months, and subsequent prohibitory orders then after for almost one month to follow with restriction on vehicular movements till last month, the NOC pocketed decent profit.

The corporation – technically bankrupt couple of years ago – has started making profit since the fiscal year 2017-18 due to the fall in fuel prices in the international market and also the implementation of automatic pricing system. The corporation claimed that it saved Rs 0.47 billion by pumping diesel through the pipeline, whereas it has earned Rs 1.77 billion from interest in last year's profit from the banks alone.

Encouraged by the first cross border pipeline, and its benefits, the corporation is also planning a second cross border pipeline project. The corporation is also planning to increase in storage capacity in all the seven provinces from the profit. Likewise, the corporation has prepared a balance sheet according to the Nepal Financial Reporting Standards (NFRS) for the first time, the NOC claimed, adding that the corporation has also increased its paid up capital from Rs 290 million to Rs 11 billion in the fiscal year 2018-19.

Supreme Court issues show-cause on tax rise on electric vehicles

The Supreme Court today issued a show-cause order against the government decision to raise the taxes on electric vehicles (EVs).
The government – through the budget for the current fiscal year 2020-21 – has increased the customs duty from 10 per cent to 80 per cent and excise duty from five per cent to 80 per cent despite its tall claims of promoting the clean energy and substitute the import of petroleum products that is the largest import of the country.
Due to the hike in the customs and excise duty, traders have stopped import of electric vehicles lately. A single bench of the Supreme Court Justice Ananda Mohan Bhattarai has issued a show-cause order showing concern on the tax hike in electric vehicles as a serious matter. Claiming that the rise in tax has made electric vehicles unaffordable to the general people, Jury Nepal – a non-government organisation – has filed a writ petition against the government move.
The provision – to raise tax on electric vehicles by discouraging the use of environment-friendly automobiles – has been not only against the government’s own policy to substitute the fossil-fuel vehicle by 2030, and also Prime Minister’s pledge to promote the clean energy through the use of electric vehicles.
The government move has also been criticised on the ground that it will hit the aspiration of making the country self-reliant in energy supply and reduce the ballooning trade deficit by substituting the import of fossil fuel.
However, finance minister Dr Yuba Raj Khatiwada has been defending his move – to increase taxes on electric vehicle against the government policy – claiming that the government is compelled to revoke the scheme to check misuse of the government package due to surge in imports of luxury electric cars.

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 price for international airlines slashed by $50 per kiloliter

The state oil monopoly has slashed the price of aviation turbine fuel (ATF) by $50 per kiloliter (kl) for international carriers, according to the Nepal Oil Corporation (NOC).
Now, the price of the ATF for international carriers stands at $1,000 per kl, down from $1,050, according to NOC spokesperson Birendra Goit, who said that the price of the ATF for international carriers has been lowered to help in making the Visit Nepal Year 2020 a success.
The NOC brought the price of ATF down as the tourism and international airlines companies complained that the jet fuel price is too high in Nepal, distracting the tourists, he said, adding that international airlines have long been complaining that the price of the ATF is very high in Nepal which has not only been a factor of high airfare but also discouraging to add more flights.
The Ministry of Culture, Tourism and Civil Aviation (MoCTCA) was also urging the Ministry of Industry, Commerce and Supplies to lower the price of the ATF in line with the demands of the international airlines and tourism entrepreneurs. But the international airlines companies say that the reduction in the price is very low.
According to Goit, the NOC has been using the profit earned from the high ATF price to subsidise the losses that it incurs in other petroleum products.
Likewise, the NOC has also lowered the retail price of Liquefied Petroleum Gas (LPG) by Rs 25 per cylinder yesterday to Rs 1,325 to be effective from today midnight. “The NOC decided to revise down the price of LPG yesterday and brought into effect from today midnight,” he said, adding that the price of the LPG is, however, lowered only for the Kathmandu valley.
According to a press note issued by the NOC, it has decided to lower the price of the LPG – popularly known as cooking gas widely used by households in Nepal – after it got the revised the rate from the Indian Oil Corporation (IOC), the sole supplier of petroleum products to Nepal.
Earlier on September 11, the NOC has reduced the price of diesel, petrol and kerosene by Rs 2 per liter coinciding with the formal launch of the India-Nepal cross border petroleum pipeline from Motihari to Amlekhgunj.

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).

Nepali, Indian PM jointly inaugurate cross border fuel pipeline

Prime Ministers from Nepal and India today jointly inaugurated the first cross-border petroleum pipeline in South Asia through a video conference via remote control. Both the prime ministers switched on the pipeline from their respective offices at Singha Durbar in Kathmandu and Hyderabad House in New Delhi via videoconferencing.
“The formal inauguration took place after Prime Minister KP Sharma Oli and his Indian counterpart Narendra Modi pressed a switch through a live video conference connecting the Prime Minister’s Office at Singha Durbar in Kathmandu, and Office of the Indian Prime Minister in New Delhi with Amlekhgunj-based oil depot of Nepal Oil Corporation (NOC) and Motihari-based depot of the Indian Oil Corporation (IOC),” according to a Nepal Oil Corporation (NOC).
“I thank my friend Modiji and the Government of India for the completion of the project ahead of the deadline. Congratulations to the Nepali team associated with the project,” Oli tweeted, after the inauguration.
Likewise, Modi wrote in a tweet: “It's a matter of great satisfaction that South Asia's first-ever cross-border petroleum pipeline has been completed in a record time. This project has been completed in half the time than expected. The credit goes to your leadership, Government of Nepal and our joint efforts.’
The 69-kilometre-long pipeline will transport fuel from India’s Barauni refinery in Bihar to Amalekhgunj in Nepal. Of the 69 kilometres, some 36 kilometres of the pipeline is on the Nepali side and the rest on the Indian side.
In Singha Durbar foreign minister Pradeep Kumar Gyawali, minister for Industry, Commerce and Supplies Matrika Prasad Yadav, Indian ambassador to Nepal Manjeev Singh Puri were present, whereas Nepali ambassador to India Nilambar Acharya was present with the Indian Prime Minister Modi in New Delhi during the inauguration. Likewise, executive director of Indian Oil Corporation (IOC) JP Sinha handed over diesel in a pot to executive director of Nepal Oil Corporation (NOC) Surendra Paudel after the inauguration by both the prime ministers.
First proposed in 1996, the Motihari-Amlekhgunj cross border petroleum pipeline finally moved forward after Indian PM Modi’s visit to Kathmandu in 2014. Then Indian Minister for Petroleum and Natural Gas Dharmendra Pradhan and then Commerce and Supplies Minister Sunil Bahadur Thapa signed a pact in August 2015 to get the pipeline project rolling. But the devastating earthquakes in 2015 delayed the construction of the project, finally completing before the deadline, in fact in record time, also making it the fastest completed bilateral project between the two countries.
If operated for 15 hours daily, the 10-inch diameter pipeline with a capacity of 2 million metric tonne per annum (MMTPA) can supply around 4,000 kilolitres of petroleum products in a day and 294-kiloliters per hour. The Nepal-India cross border petroleum pipeline is expected to help solve the oil storage problem in Nepal apart from ensuring continuous, quality and eco-friendly supply of petroleum products to Nepal, and reduce transit costs that will bring the price of the petroleum prices down.
The supply of fuel from the pipeline is estimated to save Rs 2 to Rs 5 per liter spent in transportation of the products through tankers.
According to a press note issued by the Embassy of India in Kathmandu, the pipeline is equipped with the latest SCADA tele-supervisory system and the most advanced leak detection system. “The signals of any tinkering or damage to the pipeline will be received through the optic fibre cable along the pipeline at the control centres, including at Amlekhgunj depot,” the press note reads adding that the total project cost stands at Rs 3.5 billion Indian Currency (IC), out of which Rs 750 million IC is borne by the NOC and the remaining portion is covered through Indian grants. “The IOC and NOC are also working to build an additional storage facility at Amlekhgunj depot, which will augment the storage of petroleum products in Nepal.”
IOC has started supplying petroleum products to NOC way back in 1974.

LPG price comes down by Rs 25 per cylinder

Nepal Oil Corporation (NOC) has adjusted the price of petroleum products effective from today.
The state petrol monopoly has slashed the price of liquefied petroleum gas (LPG) by Rs 25 per cylinder, bringing the price down to Rs 1,375 per cylinder, whereas it has increased the price of petrol by Re 1, and diesel and kerosene by 50 paisa per liter, respectively.
According to the spokesperson of the NOC Birendra Goit, petrol, diesel and kerosene will now cost Rs 109, Rs 97 and Rs 97 per liter, respectively. “The new prices came into effect from today itself,” he said, adding that the price has been revised according to the automated pricing system. “The NOC receives price of list of products from Indian Oil Corporation (IOC) every fortnight, and revises the price in the domestic market too.”
The IOC sends price rate on 1st and 16th of every Gregorian month.
The NOC has kept the price of aviation turbine fuel (ATF) unchanged, Goit added.

NOC former MD Khadka released on bail of Rs 20.5 million

The Special Court today ordered release of former managing director (MD) of Nepal Oil Corporation (NOC) Gopal Bahadur Khadka after he posted a bail amount of Rs 20.5 million.
Khadka was presented to the Special Court today, where a bench of Special Court Chairman Baburam Regmi, and members Pramod Kumar Shrestha and Narayan Prasad Pokharel demanded the bail amount of Rs 20.5 million.
Khadka faces corruption allegations during his career in government services in different offices in different capacities. The Commission for Investigation of Abuse of Authority (CIAA) had, on January 7, filed a corruption case at the Special Court against Khadka on the charge of amassing property worth Rs 186.6 million illegally.
The CIAA investigation has revealed that Khadka amassed Rs 86.46 million since March 15, 2013. But his expenses and investment was far more than what he legally earned in these years. He had spent and invested Rs 273.07 million in five years since 2013. Deducting his legal earning from the total amount that he spent and invested, Khadka has failed to show the source of Rs 186.6 million, according to CIAA investigation.
The anti-graft body has – after investigation – sought penalty of up to five years of imprisonment, fine equivalent to illegally earned property, and confiscation of illegally earned property. He had misused his power and close relations with CIAA former chief Lok Man Singh Karki to amass the wealth and invested in his own name and others to whitewash the money earned from alleged corruption.

NOC slashes fuel prices

The continuous fall in the prices of fuel in the international market has pushed the fuel price in the domestic market down too. Nepal Oil Corporation (NOC) has – effective from tonight – revised the fuel prices downwards by Rs 2 per litre. "The NOC has reduced the retail prices of petrol, diesel and kerosene by Rs 2 per litre," informed spokesperson of the state utility Birendra Goit. "After the revision, a litre of petrol will now cost Rs 112 while diesel and kerosene will cost Rs 99 per litre," he said, adding that the petrol and diesel are in profit, even after decreasing the price. "However, the NOC still incurs Rs 288 loss in a cylinder of LPG – popularly known as cooking gas – though the corporation is profiting in other petroleum products including petrol, diesel and kerosene.
The NOC revises the price of fuel, according to the price list sent by its sole supplier Indian Oil Corporation (IOC) that sends the price list, twice a month on the first and 15th of the Gregorian calendar.
However, this is the first time, the NOC has reduced the fuel price after the incumbent government led by Prime Minister KP Sharma Oli came to power months ago.

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."

Load shedding hours to increase to daily 12 hours from Sunday

Nepal Electricity Authority (NEA) has increased the power cut hours effective from Sunday.

A consumer will have to face 12 hr power cut a day Sunday onwards.
The extra hour of mandatory power cut imposed by the authority is going to be increased four hours weekly to 84 hours from the current 80 hours further worsening the industrial climate.

Increased demand versus supply also due to reduction of water level in the rivers with the onset of winter has been key reasons behind the new schedule.

Rise in power cut hours will not only increase import of diesel and petrol but also fuel inflation due to increased operational cost of the industries.

Petroleum product is the largest import of the country that imports around 25 per cent fuel out of its total imports.

The increased cost will also make domestic products uncompetitive.

According to the central bank recent data, the industries have been operating at only 57 of their capacity due to lack of electricity and increasing dependency of he imported fossil fuel

Despite having huge economically viable hydropower potential, the current production stands at 1200MW only making some 700MW power deficit.