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Kathmandu Saturday November 24, 2001 Marga 09, 2058.
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NOC under pressure to
review oil prices
By Prem Khanal
KATHMANDU, Nov 23 – As the international
oil price has declined to the lowest level in two years, pressure is mounting on Nepal Oil
Corporation (NOC), the state-owned monopolist responsible for the imports of petroleum
products, to review its domestic petro-prices.
The government last year, while hiking the
prices of petroleum products, had promised that the prices would be reviewed if the
international oil price fell.
The then minister of Industry, Commerce, and
Supplies Ram Krishna Tamrakar had announced that the government would adopt a policy of
reviewing the petro-prices correlating it directly with the international oil price.
Since the international oil price has plunged
to less than US $ 19 dollars per barrel after September 11 attacks on the United States,
pressure is mounting upon the government to implement its petro-price policy announced
last year.
Alone with the decline in the global oil
price, the purchasing oil price of NOC from the international market has also declined by
around 30 per cent. The global oil price had increased immediately after the terrorist
attack in America and the NOC had paid US $ 273 per ton kerosene last September.
However, in its last purchase, per ton price
of kerosene tumbled drastically to touch US $198 per ton, which is around 50 per cent less
than last year’s purchasing price. During that time, the international kerosene price
had skyrocketed to touch US $ 380 per ton and the government had announced a massive price
hike citing a huge financial loss of more than Rs 3 billion.
As per the understanding with the Indian Oil
Corporation (IOC), NOC buys kerosene from international market and exchanges it with
petrol and diesel in India.
Officials of the NOC say that despite the
decline in the international oil price, domestic oil price will not be reviewed
immediately. "Since it takes at least 3 months for the newly purchased oil
consignment to arrive here, prices can only be reviewed after that," said Madan Raj
Sharma, Executive Director of NOC.
He also said that the existing oil supply was
purchased on May, June, and July and the global kerosene price at that time was US $ 260
to 300 per ton.
However, NOC officials say that the
possibility of immediate down revision of the domestic petro-prices is slim since the
Indian oil minister has clearly ruled out such possibility and as long as India
doesn’t decrease the price, it would be technically impossible for Nepal to cut
prices.
"The existing difference in the
petro-price between Nepal and India has been a serious problem for NOC and it has forced
the corporation to bear heavy losses due to the ongoing smuggling of perto-products from
Nepal to India," Sharma added.
He also said that if the domestic prices are
lowered without the parallel decline in India, the existing price difference would be
further widened and the illegal outflow of petroleum products from Nepal to India could
scale to an unbearable level.
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