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Kathmandu Monday October 16, 2000 Aswin 30, 2057.
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Hard-hitting hike
Whether one buys the argument that the adjustment of
petro-prices in India to international prices necessitated a consequent hike in prices in
Nepal or not, the recent hike in prices of petrol, diesel, kerosene and liquefied
petroleum gas by 17.50, 20, 100 and 19 percent respectively isunprecedented. The
consequences are obviously going to be far reaching.
The immediate reaction of experts after the hike was
understandably one of alarm. Even a layman can tell that this is going to set off an
inflationary chain reaction which will in turn slow down economic growth and hit consumers
hard. Particularly, it must be mentioned that the price of kerosene has become forbidding.
Accompanying this is a provision of ration cards that will fetch all households three
litres of kerosene a month at a subsidized price. The government could have done without
this stunt even if the hike was absolutely necessary. There is also much in the allegation
that the ration card system will encourage corruption. Some have also opined that the fuel
price hikes will serve to cushion the losses of Nepal Oil Corporation (NOC), incurred as a
result of government subsidy on kerosene and LPG.
This may be some consolation to NOC, but what about the
general consumer? Another question that has to be asked at this point is: if fuel prices
go up in Nepal when international prices go up, then why don’t prices come down in
Nepal when international prices fall? One answer could be, our oil prices are tied up to
oil prices in India more than the international prices. It is not surprising then that
whenever India has increased fuel prices, Nepal has always followed suit. The
justification for this is that subsequent hikes eliminate cross-border smuggling resulting
from the price difference. This is at best a mere excuse. It is in reality, the result of
our own weakness. We are helpless about the open border and conveniently put the blame on
it. If the border was well regulated, the price hikes in India would not necessarily have
led to subsequent hikes in Nepal, and more, many other problems would not have been there.
However, we are helpless about i and this resigned attitude is the main problem. The
border must be regulated effectively first.
Even if the hike was absolutely necessary, the government
must be able to assure the people that the prices can come down when international prices
also come down and live up to its words. This is the least the government can do by way of
relief.
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