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VOL. 27, NO. 39, June 13 , 2008 (Jestha 31 2065 B.S.)
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PETRO PRICE HIKE Provisional Measure
The government goes for partial price hike, which could be too little too late as it faces spiraling fuel prices in the international market
By SANJAYA DHAKAL
After months of dilly-dallying, the government finally allowed the state-owned Nepal Oil Corporation (NOC) to hike the price of fuel. But as it faces unprecedented and record-shattering rise of fuel price in international market, the current measure could prove to be too little too late.
The board of directors of the NOC, on Monday (June 9), decided to hike the price of petroleum products. Following the directive of the political committee of the cabinet to adjust market prices, Monday, the NOC board decided to hike the price of petrol, diesel, kerosene and cooking gas.
As per the decision, the price of petrol has been increased to Rs 100 per liter from Rs 80. Likewise, the price of diesel and kerosene have been increased to Rs 70 and Rs 65 per liter, respectively. The price of cooking gas per cylinder has been increased from Rs 1100 to Rs 1200 (for Kathmandu valley) and Rs 1180 (for Terai region).
"The new price will help improve supplies but it will definitely take some time," said NOC spokesperson Mukunda Dhungel. Dhungel, however, added that even with the new price rise, the monthly losses of NOC stands at Rs 1.5 billion. Earlier its monthly losses stood at Rs 2.62 billion. Owing to severe rise of fuel price in the international market, the NOC had been suffering huge losses and had reduced supplies by 40 percent.
The board has also decided to cut down taxes and duties on petroleum products. According to Purushottam Ojha, Secretary at the Ministry of Industry, Commerce and Supplies, the custom duty on petrol has been reduced from Rs 14750 per kiloliter to Rs 14000; duty on diesel has been reduced from Rs 2100 to Rs 1600 per kl; and duty on kerosene has been reduced from Rs 1300 to Rs 1000 per kl. The duty on cooking gas has also been reduced from 6.75 percent per cylinder to 2.75 percent. Local development taxes too have been brought down from 1.5 to 1 percent. Reports say that by raising the price, the NOC can collect Rs 920 million more from the sales while the reduction in taxes will help it save Rs 80 million.
Earlier, traders and business sector had made fervent pleas to the government to ensure smooth supply of the petroleum products.
A few days ago, during its meeting with the Minister for Industry, Commerce and Supplies, the representatives of Federation of Nepalese Chamber of Commerce and Industry (FNCCI) suggested ways to overcome the problem – price rise being one of them.
FNCCI president Kush Kumar Joshi presented a seven point recommendations to the government including laying of petroleum pipeline from Raxaul to Amlekhgunj, tax rebate on import of petro products, ban on the import of automobiles that use excessive fuel.
On the other hand, the dealers have threatened to launch strike in fuel supplies from June 15 if the government does not ensure smooth supply.
Shiva Prasad Ghimire, president of Nepal Petroleum Dealers Association has said that they are only getting 20 percent of the demand leading to severe shortage.
Furthermore, transporters even staged a sit-in at the central office of NOC and its depots in different regions across the country on Sunday (June 8), protesting the erratic supply of petroleum products and black-marketing.
