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VOL. 27, NO. 21, February 01, 2007 (Magh 18 2064 B.S.)
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Shocking Spike
The government is inviting full-blown economic crisis by failing to manage the oil price
By SANJAYA DHAKAL
The scenes of violent street protests repeated in the capital last week when the frustrated gangs of people took over the capital roads and forced the all-powerful seven party government into biting the dust.
Less than 36 hours after the government had announced hike in the price of diesel, kerosene and cooking gas, it was compelled to roll them back unable to bear the heat emanating from the streets.
As the prime minister was not in good health, an emergency meeting of cabinet ministers was called on Wednesday (Jan 23), which decided to roll back the decision to hike the fuel price taken by Nepal Oil Corporation (NOC) on Monday night.
In the flip-flop by the government, what became most apparent was its utter weakness. At a time when the government is promising peaceful election in April and has vowed to crush any disruptions, the street violence witnessed in the heart of the capital last week showed otherwise.
"For nearly two full days, the government deserted the streets of the capital and let the mob play out their frustrations. In a short-sighted move, it recoiled from the decision of fuel hike," said an economist.
As usual, the Minister for Industry, Commerce and Supplies became the favorite target. Harassed by violence, Minister Shyam Sundar Gupta said the government decided to roll back the price hike taking into account the problems caused by it to ordinary citizens.
He said that the Finance Ministry would make necessary arrangements for recovering the NOC's losses. Citing its growing losses and the rise in crude oil prices in the international market, the NOC had on Monday increased the price of diesel to Rs 61 per liter from Rs 56, LP gas Rs 1,250 per cylinder from Rs 1100 and kerosene to 61 per liter from Rs 51.
Immediately, after its decision to hike the fuel price, the student organizations affiliated to ruling seven parties announced protests and strike.
In the absence of clear leadership, demonstrations continued around the country and turned violent in the capital where a number of journalists, too, were beaten by the angry mobs.
But amid the chaos, missing were the economic logics behind the whole crisis. A poverty-stricken nation such as Nepal cannot be expected to pump billions of rupees continuously to subsidize fuel – most of which as shown by various reports are used not by the poorest section of the people but the ones living in and around urban areas.
Perhaps that was why Finance Minister Dr. Ram Sharan Mahat conceded that the decision to roll back the fuel price hike was not economically sound one. He said so at a parliamentary committee meeting a day after the government rolled back the price hike.
Besides, the debate on liberalizing the oil sector by gradually opening it up to the private players has also not gained the momentum it deserves.
