Petro-price hiked
Kerosene hits the roof

By Bhaskar Sharma & Prem Khanal

KATHMANDU, Oct 13 - Bowing under mounting pressure due to bloating international oil prices and recent price hike by India, the government has finally announced to increase the price of diesel by 20 per cent, petrol by 17.50 per cent, kerosene by 100 per cent and LPG by 19 per cent.

However, in the case of kerosene, the government for the first time has also made up its mind to introduce the ration card system nationwide, under which, each household with ration card will be entitled to 3 litres of kerosene every month at subsidized rates of Rs 15.50 per litre, exclusive of transportation charges which the consumer has to bear.

"The Cabinet today took the decision in line with the recommendations put forward by NOC to raise petroleum prices," said Madan Raj Sharma, Executive Director of Nepal Oil Corporation (NOC).

The new prices for petrol, diesel and kerosene are Rs 47, Rs 27.50 and Rs 26 per litre, up from Rs 40, Rs 23 and Rs 13 respectively. Similarly, the price of LPG per cylinder was hiked from Rs 465 to Rs 550.

Petro-price increase at home followed price hike by India on September 29, propelled primarily due to rising international oil prices and depreciating rupee against the US greenback.

Though raise in domestic oil prices will to some extent help in bridging the oil deficit and providing cushion to the weakening rupee, in addition to curbing cross border smuggling arising out of price differentials between the two neighbouring countries, yet it is bound to have an inflationary pressure on the economy.

"Petroleum price hike in the domestic market will surely cause inflation and slow down the rate of economic growth. Nepal, however, could not remain in isolation without raising price under the present circumstances. It should now try to come up with alternative measures to minimize the damage caused by the price surge," said Dr Yuba Raj Khatiwada, Chief Economic Advisor with Nepal Rastra Bank (NRB).

With the Indian announcement to hike prices on September 29, Nepal was sure to review its own pricing structure. However, the matter was left lingering considering the socio-political impact it would have during the Dashain festivals.

India raised the prices of diesel, kerosene and petrol by IRs 3 on an average. Per litre diesel price in New Delhi presently stands at IRs 16.54 (NRs 26.50), up by IRs 2.50. Similarly the price of petrol and kerosene has also increased by IRs 2.38 to touch IRs 28.45 (NRs 45.52) and by IRs 2.81 to IRs 8.36 (NRs 13.38) respectively.

Nepal had last raised petro-prices on September 27 last year when it hiked kerosene prices by 23 per cent and diesel by 48 per cent, leaving the price of petrol unchanged. The price of petroleum products in the international market then had swung from bust to bump.

While the price per barrel of crude oil last March had fallen as low as US $ 10 per barrel, its price at the time of hike last year hovered around US $ 20. Since then petro-price has continually upsurged, which today hovered around US $ 35 per barrel.

"Petro-price hike is bound to increase costs of production and inflate the import bill. However, it was inevitable considering the recent price hike in neighbouring India and soaring world oil prices," said Dr Shankar Sharma, member of National Planning Commission (NPC).

However, member of the opposition, Dilli Raj Khanal said that price hike should have been delayed considering the recent assurances of Indian Prime Minister Atal Bihari Vajpayee to roll back oil price hike to around 10 per cent from the present average of 18 per cent.

He also said that if the government adopts a policy of increasing prices of petroleum products at times when world prices are high, it should simultaneously reduce prices with a decline in international price level.

Though the decision to raise petroleum prices will deal a hard blow upon consumers yet it will help in containing the losses that NOC is incurring not only in the sale of kerosene, which the government subsidizes, but also in diesel and LPG.

With the introduction of new prices, loss per litre of diesel and kerosene, under ration card, will stand at Rs 4.50 and Rs 9.75 respectively. Similarly, the loss per cylinder of LPG comes down to Rs 100 from Rs 187.

However, kerosene in the open market will fetch profits of Rs 0.60 per litre. Similarly, petrol would enjoy profits of Rs 5.40 per litre, which will still be difficult for NOC to provide a cushion to its accumulating losses. Low volume of sales of petrol could never fully offset the loss accrued due to sale of kerosene, diesel and LPG.

The annual demand for kerosene and diesel presently stands at around three hundred fifty thousand kilolitres each while that of petrol is only about sixty thousand kilolitres.

With price of petroleum products in the international markets still showing no signs of coming below US $ 30 per barrel, it is unlikely that pressure on NOC will fully recede although price is hiked at par with India. The only hope left would be for OPEC to bow down to international pressure, especially USA, to increase the production quota to contain the per barrel price of crude oil at the principally agreed US $ 25.

Nepal could tax rice import, lift ban on exports

Post Report

KATHMANDU, Oct 13 - Following the plunge in the price of rice and wheat produced in Nepal, the cabinet meeting today discussed ways to control Indian rice from entering Nepal in an attempt to boost prices of paddy.

Sources in the cabinet on condition of anonymity said that Friday’s meeting discussed a two-pronged strategy to help bolster paddy prices as a relief measure for hard-hit Nepali farmers.

The entry of Indian crops had plummeted the price of rice by more than 40 percent, which largely affected the Nepali farmers who occupy 80 percent of the total population.

The strategy involves levying a tax on paddy import to discourage the import of Indian produced paddy which is the chief reason for falling prices of Nepali rice. Another strategy is to lift the ban on exporting surplus paddy which has been in effect for rome time.

However, no decision was made during today’s cabinet meeting. Sources say, a decision is likely in the next meeting on Monday, but there are still problems.

"We are still discussing whether or not to levy the tax on paddy import since that would be against the norms of the World Trade Organization which Nepal is going to join in the near future," said a high government official.

Aside from the paddy issue, the cabinet also took up hiking prices of petroleum products, as well as controlling the bird menace at TIA by halting the dumping of garbage along the Bagmati river banks.

Meanwhile, Kathmandu was rife with rumours that the cabinet had also decided to shift Home Secretary Padam Prasad Pokharel to the Health Ministry and bring in Health Secretary Srikant Regmi as the new Home Secretary. However, sources said that no such discussion or decision was made by today’s cabinet meeting.

But the possibility of Pokharel’s transfer is still very high. Already, former Home Minister Govinda Raj Joshi and erstwhile Inspector General of Police Achyut Krishna Kharel have been shunted aside in the aftermath of the police disasters in Dunai, Dolpa, late last month when 14 policemen were killed by rebels. Joshi was forced to resign, while Kharel has been sent on home leave.

Meanwhile, the cabinet also discussed erstwhile IGP Kharel’s future, sources say. They said that he could probably resign his post within a week if appointed as an ambassador.

Key to bird problem lay gathering dust

Post Report

KATHMANDU, Oct 13 - The hue and cry raised by the recent spate of aircraft-bird collisions at Kathmandu International Airport could have been averted if civil aviation authorities had implemented the recommendations of a one year old report prepared by German experts.

A copy of the report titled "Study of Bird Strike Risks at Kathmandu International Airport," obtained by The Kathmandu Post through government agencies, shows that TIA and its surrounding areas are habitats for a large number of bird species. But they could be prevented from turning into flight-safety hazard if effective countermeasures are implemented.

Some of these measures include auditory and visual deterrent techniques to scare away the birds, effective management of solid waste, using birds of prey to control smaller bird population, chemical repellents, and a comprehensive long term plan to ensure flight safety.

The report was prepared by a team of experts from the German technical assistance agency GTZ and included air traffic experts, solid waste management experts and ornithologists (bird experts) from Germany. The expert team was led by Dr Ernst Reichenbach.

That most of the recommendations were never seriously implemented even after one year of its submission to various government departments, including TIA and CAAN, underscores the gross negligence of aviation officials.

Nagendra Prasad Ghimire, former director general of CAAN who presented the report last year in March by GTZ, said that authorities were in the process of implementing some of the recommendations to minimize bird risks at TIA.

"We even tried some of the methods using sound deterrence methods as recommended in the report, but it did not quite work as planned," Ghimire said. CAAN had also begun modern solid waste management techniques at the airport and surrounding areas as prescribed in the report, he added.

Sources in the expatriate development community in Kathmandu told The Kathmandu Post that Ghimire was interested in implementing some of the recommendations, and was just working towards that goal when he was transferred to the Ministry for Tourism, Civil Aviation and Culture recently.

Meanwhile, authorities at TIA, who could have done more to stem the flight-safety hazard caused by bird activity, did not show enough inclination.

The issue is pertinent here since the question of deteriorating flight-safety at TIA is a growing concern in light of the five aircraft-bird collisions at the airport since August, the latest of which occurred Thursday. There have been no fatalities or even injuries so far, but equipment worth millions of dollars have been damaged, lending TIA a bad image.

Bowing to intense pressure from the media, airlines and tourism industry stalwarts, CAAN has finally decided to do something concrete about the bird risks.

In a statement issued Friday, it said more effective measures to control the bird problem as well as the problem of solid waste management were being implemented with immediate effect. It also said that the government had decided to halt with immediate effect the dumping of garbage on the banks of the Bagmati river to construct a road, which had been singled out by many critics as attracting birds.

DPM Poudel blamed for TIA bird strikes

Post Report

KATHMANDU, Oct 13 - Representatives of the travel trade industry today blamed the Deputy Prime Minister Ram Chandra Poudel for the repeated cases of bird strikes at Kathmandu’s Tribhuvan International Airport.

DPM Poudel who is also the Minister for Local Development is responsible for the garbage dumping site and since assuming office has been blamed for not finding permanent solution for the residents of Kathmandu.

At an interaction between the representatives of the groups within the travel industry, participants suggested immediate shifting of the new garbage dump site from near the airport that has been blamed for birds scavenging on the garbage.

In the past few weeks, at least five aircrafts have been hit by birds and some of them have resulted in heavy damage to the aircrafts. Though there has been no injuries, four of these accidents involved jets flying on international routes.

The government has assured that they would take immediate temporary measures such as employing bird hunters and installing sirens but the industry representatives said it was not enough.

"We went to the airport this morning and saw three bird shooters doing their work ... but there were 20-25 big birds and one of them was at least a meter long. With the wing span these birds have, it can cause big damage if sucked into the engine," said Lawrence Liu, Vice President of the Board of Airline Representatives in Nepal.

Suggestion were made to pressure the government to bring in experts from abroad to deal with the problem since such problems have also occurred in other airports around the world.

"We are not bird experts ...this is the job of the government and the civil aviation authorities. They have not done their job and we are very concerned," said Yogendra Shakya, a prominent tourism entrepreneur.

However, some of them even suggested that they stop paying taxes or stop work.

"Why should we pay taxes to people who do not do their job. We need to pull together and go to the prime minister and tell them to take action or else...."said Ashok Pokhrel of PATA.

They said that the industry that generates up to US dollars 160 million a year is being threatened again just after the slow tourist flow after the hijacking of an Indian Airlines jet last year.

"The birds must go at any cost," said Pokhrel.

Leftists urge Govt for talks with Maoists

Post Report

KATHMANDU, Oct 13 - The grouping of nine left parties has urged the government to create the "minimum environment" required to holding talks with the Maoist leadership, warning that the government’s move to mobilize the army to combat insurgency could lead to civil war.

This was decided in a meeting of the left parties held today, according to a press release issued by the Group. The meeting is said to have discussed at length the political situation of the country.

"The Maoist problem is emerging as a more complex problem," the release signed by the nine left leaders said. "We would again like to lay emphasis on talks. For talks can only help solve the problem."

"We strongly denounce the government’s recent decision to mobilize the army. The move will not only push the nation towards a serious civil war but also bring an end to the outcomes of the 1990’s popular People’s Movement."

The underground Maoist leadership has called on the government to create what they term minimum environment required to hold talks by releasing the Maoist leaders held in custody and by making public the whereabouts of those disappeared.

The Group has also expressed deep condolence to the sudden demise of Ashakaji Bashukala of Nepal Workers and Peasant’s Party (NWPP). The meeting was chaired by CPN-Masal General Secretary Mohan Bikram Singh.

The Group comprises NWPP, CPN-Mashal, CPN (United) CPN-M, CPN-ML, CPN-MLM, CPN (Unity Centre), United People’s Front (UPF) and National People’s Movement Coordination Committee (NPMC).