SCARCITY OF OIL Subsidy Politics

Failure to impose real market prices interrupts the supply of petroleum products<br><STRONG><EM>DEBESH ADHIKARI</EM></STRONG>

Jan. 16, 2012, 5:45 p.m. Published in Magazine Issue: Vol. : 05 No.-13 Jan. 13 -2012 (Poush 29,2068)<BR>

Despite the release of Rs.1.5 billion as a loan by Nepal Provident Fund and other banks to Nepal Oil Corporation, the smooth supply of petroleum products seems to be far away.


Nepal Oil Corporation is selling petroleum products incurring a huge loss. According to NOC, it is incurring Rs.1.07 loss per liter on petrol, Rs.17.84 on diesel, Rs.7.07 per liter on kerosene and Rs.431.47 every cylinder (14.2 KG) of LPG. NOC is however making a profit from aviation fuel to the tune of Rs. 12.89 per liter from domestic airlines and Rs.27.50 per liter from international airlines.


Annually, Nepal Oil Corporation imports petroleum products worth of Rs. 85 billion rupees and it is one of the biggest products imported for domestic use.


Due to absence of fuel, along with the normal lives, industrial, transportation, tourism and education sectors are also adversely affected.


Nepal Oil Corporation (NOC), the monopolist in the petroleum market, should be blamed along with the Minister for Commerce and Supplies for the current crisis. NOC, an already troubled company which has been facing losses on the sales of fuels except for petrol and air fuel, has not been able to pay enough money to Indian Oil Corporation (IOC).


According to acting managing director of NOC, Suresh Kumar Agra, an uninterrupted supply of petroleum products is impossible without increase in the price of petroleum.


Due to the reluctance of governmental and non-governmental organizations to provide any loan to NOC, to ease the supply, government has decided to provide loan to the corporation from Employees’ Provident Fund (EPF). NOC signed NRs 1.5-billion loan agreement with the (EPF).


With this the government has taken a big risk by putting on stake the hard earned money of around 4 lakh and 60 thousand government and non-government employees, and the supply situation will slip back again.


The only option for the government is to adjust the petroleum products at par with the international market.


 

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