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Kathmandu Thursday January 18, 2001 Magh 05, 2057.
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Unexpected
move
Unexpectedly, the state-run Nepal Oil
Corporation’s (NOC) move to reduce the prices of petroleum products has given some
relief to consumers. This means that the prices of petroleum products have come down
marginally for the first time after NOC raised the prices four months ago. If the prices
of petroleum products had not declined in the international oil market, and had the prices
of petrol and diesel in India not been at par with the prices in Nepal, the move to revise
the prices of petroleum products here would have been impossible. However, it is hoped
that the move to roll back petroleum prices will not affect the country’s economic
growth.
Last October, NOC had to increase the prices of
petroleum products after they touched a 10-year high in the international oil market. For
instance, kerosene for a litre cost over 26 rupees and gas for a cylinder was raised from
450 to 550 rupees in the commercial market. This had hit the lower and middle income
groups of consumers harder than the country’s economy. It is unfortunate that NOC did
not slash the price of gas also even though it revised the kerosene price. Now, the
revised commercial price for kerosene has come down by five rupees while diesel and petrol
have been reduced by one rupee only, keeping at par with the Indian rate. The decision to
eliminate the "ration card system" should be deemed as a step in the right
direction to prevent corruption and mismanagement.
The country meets the entire domestic demand for
petroleum products through imports. But the problem is that the country has had to face
280 percent increase in price of petroleum products since February 1999 when the price of
crude oil was at 10 dollars a barrel in the international oil market. This happened due to
lack of effective measures to monitor the open border with India. This apart, had Nepal
not pegged its currency to the Indian rupee, and if the country had not looked for
economic ties with India, things would have definitely been better than what they are
today. Unfortunately, this did not happen. What has happened is that whenever India raises
the prices of petroleum products, Nepal has to do so also just to prevent illegal
cross-border trade.
The government must realize that it has neither
introduced any measures to lessen economic burden viz a viz India, nor has it been able to
prevent cross border smuggling. The recent slashing of kerosene price, more than petrol
and diesel, will increase the cross border smuggling. This may prompt NOC again to raise
the commercial rate of kerosene in the market. It is, therefore, necessary that the
government introduce measures to foster a situation which will minimize not only
cross-border smuggling while regulating petroleum prices but also its economic ties with
India.
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