Nepal Oil Corp fixes LPG price

Post Report

KATHMANDU, June 25 - After months long confusion, the Nepal Oil Corporation (NOC), the state owned monopolist importer of petroleum products, has finally fixed the selling price of Liquefied Petroleum Gas (LPG) for vehicles from the newly established LPG refueling stations.

Madan Raj Sharma, Executive Director of NOC informed The Kathmandu Post that the per liter selling rate of LPG through the auto gas stations has been fixed at Rs 22, equal to price fixed for cooking LPG.

The price fixing announcement came after a long-existed dilemma of both the government and NOC, as to whether the selling price of vehicle LPG should be above or below the price of subsidized LPG for cooking purpose. The price related quandary had become so complicated that NOC even requested Ministry of Industry, Commerce and Supplies to recommend possible solutions.

Currently two privately owned refueling stations, one in Chabahil and another in Kalanki have started dispensing LPG into the in-built LPG tank of the gas powered vehicles. Since around 1,000 LPG-powered vehicles absorb a substantial portion of imported LPG and occupy a remarkable number of cylinders, the operations of the stations are expected to help in solving the frequently occurring LPG shortage in the valley.

Sharma said that after some time when most of the vehicles start using their in-built tanks, around 5,000 cylinders would be released into the market for household use.

When asked about the possible hike in LPG price, Sharma clarified that the NOC’s proposals related with the hike in the prices of LPG, which was submitted with Ministry of Industry, Commerce and Supplies, is still alive and said that the price hike may be announced.

NOC had sent a proposal to the concerned ministry to hike the price of LPG arguing that the whopping increase of around 40 per cent in the purchasing price of LPG has left NOC with no option than to restructure the LPG price. The per ton price of LPG has swelled to touch US$ 375 presently, up from US$ 280 per ton at the time when the last hike announcement was made.

With the latest increment in the price of LPG in the international market, the net per cylinder loss to NOC in the LPG transaction has also escalated. "The net per cylinder loss in the LPG has jumped to Rs 165 against Rs 102 set at the last petro-price hike announcement," said Sharma.

He further informed that since NOC currently imports 3,700 tons of LPG a month, the accumulated annual loss for only in the LPG transaction will surge to Rs 500 million, if immediate steps are not taken.

Sharma also informed that the NOC has received a proposal from the Indian Oil Corporation (IOC) regarding joint venture for the construction of proposed LPG bottling plant in Janakpur. Sharma informed that IOC has proposed two different options with NOC for the partnership.

First, equal investment of NOC and IOC in the project. Second, 26 per cent investment from each side, and the rest from public flotation. He also hinted that NOC is in the favour of the second proposal as it ensures public involvement.

Bothered by the frequent disturbance in the regular supply of LPG, the NOC, some five months ago, had decided to construct a gas storage depot and to start its own distribution channels at the estimated cost of Rs 300-400 million.

Vehicles import surges

BIRGUNJ, June 25 (PR) - If customs figures are anything to go by, import of Indian vehicles in the first nine months of the current fiscal year has seen a remarkable increase - over four times in the small cars and jeeps category, and over three times in the case of trucks and buses.

The total number of small cars and jeeps imported from India in the first nine months of the current fiscal year stands at 1,143, up from last year’s corresponding imports of 281. While the value last year was at a mere Rs 84.87 million, this year’s value comes to Rs 506.99 million, a whopping increase of almost 6 times. The resulting customs revenue for the government was Rs 417 million.

Similarly, as in the case of small cars and jeeps, import of chassis of trucks and buses has risen remarkably. As compared to the nine months imports of Rs 332.35 million last fiscal year, the import value this corresponding period stands at Rs 1.22 billion. The number of chassis imports surged from 513 to 1804 in the first nine months of the two consecutive years.

In the like manner, 83 mini-buses, 140 pick up cabs and 7,553 motorcycles were imported in the first nine months of the last fiscal year. The imports in the corresponding period this fiscal year stood at 98 mini-buses, 1,390 pick up cabs and 11,940 motorcycles.

Import of vehicles from third country has also surged as compared to the last year’s nine-month figures. While 187 cars and jeeps worth Rs 96.5 million was imported from abroad in the first nine months last year, the import figures in the corresponding period this year stands at 235 valued at Rs 169.2 million.

Similarly, import of third country motorcycles also increased by cent per cent. However, the value of imports in the first nine months has gone up by only 50 per cent from Rs 102 million last fiscal year to Rs 156 million this fiscal year.

Fertilizer supply inadequate despite govt claims

By Rajeeb Tamrakar

KATHMANDU, June 25 – Despite high hopes pinned by the government and the Asian Development Bank (ADB) that the fertilizer supply would improve after its deregulation since December 1999, the supply of the basic agriculture input is yet to pick up.

Although officials at the Ministry of Agriculture and Cooperatives (MAC) claim that the available stock with Agricultural Inputs Corporation (AIC) and the private sector is enough to meet the demand for the forthcoming wet season plantation, others related have a different story to tell.

According to Dr B.B. Basnet, Chief of the fertilizer unit at the MAC, the government presently has 28,000 tons of fertilizer, which includes 11,920 tons of urea, 10,800 tons of DAP and 5,100 tons of potash received under the KR-II grant assistance from Japan in 2000. The fertilizers are piled up in different warehouses as buffer stock and are awaiting government order to be released in the market.

He said that the available stock with the private sector, the AIC and the government is enough to meet the current demand. The government is merely using the 28,000 stock as a means to curtail the private sector from exploiting the farmers. "We even supplied 1000 tons of urea to the AIC when there was fertilizer shortage recently due to the closure of offices during the period of national mourning," said Dr Basnet.

But the swelling number of farmers waiting for fertilizers at different sales depots indicates a different argument. Data available shows that the aggregate fertilizers’ stock is not enough to cater to farmers’ needs.

Even Pashupati Gautam, chief of the procurement division of AIC, claimed that the AIC’s stock of 47,000 tons of fertilizer, apart from the buffer stock of 28,000 tons, is not enough. The stock available with the AIC, which is the major supplier of fertilizer in the country, is far below the estimated demand of 170,000 tons for the wet season plantation. "The present stock with the corporation will only last till mid July," he said.

On the other hand, opposing the government claims, fertilizer traders said that the private sector has no fertilizer reserves. According to Shanti Lal Sherstha, marketing manager of Nepal Fertilizer Cooperatives, who is involved in private sector fertilizer trade, "The private sector has no fertilizer stock."

Furthermore, the fertilizer inflow to Nepal via the legal sources has also stopped as the Indian government imposed quantitative restrictions in the export of urea and cut down subsidy in natural gas provided to the fertilizer plants. The result was the widening of the gap between demand and supply.

In addition, with the deployment of army at the major customs points by the government, illegal flow of Indian fertilizers into the country has also decreased, further aggravating the short supply for the upcoming wet season paddy crop plantation. Cross border supply in fertilizers had been one of the major source of fertilizer supply after the government opted for deregulation.

Fertilizer crunch comes as a major damper to the subsidy removal policy adopted by the government under the pressure of ADB. It was ADB which successfully coaxed the government to scrap subsidy in fertilizers during the signing of the Second Program Loan in the mid-1990s hoping that subsidy-removal would encourage greater private sector participation in fertilizer imports and distribution.