Demand for diesel and aviation fuel slumps

By Prem Khanal

KATHMANDU, Jan 19: In yet another strong indication of dwindling Nepalese economy along with global slowdown, the total demand of diesel and aviation fuel registered a double-digit shrunk for the first time in the history of Nepal.

According to the data made available by Nepal Oil Corporation (NOC), the total sale of diesel, one of the major industrial inputs recorded a slump of 11.67 percent during the first half of the current fiscal year as compared to the same period last year. The overall demand of diesel, during the first half remained at 136,089 kiloliters against 154,077 kiloliters observed last year.

The main cause of the slump in the demand of diesel consumption is the shrinking economy of the country. According to an estimate, over 80 per cent of the total national demand of diesel is solely consumed in transportation, which ultimately depends on the domestic economic and industrial activities.

"Since demand for diesel is closely correlated with the industrial activities, the slumping economic activities in recent months is one of the influential factors for such decline," Dr Prakash Sharan Mahat, Chief Economic Advisor to the Prime Minister said.

There are already widespread reports that the business transactions of trucks and other public transportation have slipped to a record low level. Squeezing industrial activities particularly due to the ongoing sluggishness in the real estate business is one of the prime factors for dropping demand of vehicles ferrying goods.

The situation is more serious in case of the passenger bus businesses. The number of passenger travelling in the short-route buses as well as the long-routes ones are reported to have declined in recent months. The downturn in most of the labour-intensive industries like carpet, ready-made garment and pashmina products, that has absorbed around half a million people in the valley alone, are the main reasons for the dwindling number of bus passengers.

Similarly, the most alarming downfall has been witnessed in consumption of aviation fuel, which clearly indicates that tourism sector has been hard hit by the continuously sliding numbers of tourists. NOC statistics shows that the demand of aviation fuel, during first half, has recorded a nosedive of over 25 per cent to 26,043 kiloliters from 35,160 kiloliters. Similar, decline of over 14 per cent was also recorded during the first quarter of the current fiscal year.

However, despite the decline in the diesel and aviation fuel consumption, the total sales of petroleum products, during the period, recorded a nominal soar of 1.46 per cent to 408,997 kiloliters from 403,099 kiloliters last year propelled mainly by the surge in demand of kerosene and cooking gas.

During the period, the total sale of kerosene, the prime cooking fuel for majority of the middle class households, increased by almost 16 per cent against 7 per cent recorded during the first quarter. The total sale of kerosene touched 180,031 kiloliter up from last year’s 154,798 kiloliter.

The continuing shift of rural households towards the use of kerosene from traditional firewood combined with continuing illegal outflows towards India due to the price difference are the causes of such soar.

Beside, NOC officials also argue that the increasing use of kerosene as an alternative fuel in the diesel vehicles is another factor for the surge. There were reports that local administration, particularly in the Terai area had caught dozens of trucks and busses for using kerosene instead of diesel. "Since kerosene has been subsidized for the households cooking purpose, we can’t allow its use in transportation for the commercial purpose," says Madan Raj Sharma, Executive Director of NOC.

Similarly, the sale of petrol during the period increased by 5.9 per cent to 31,052 kiloliter from 29,322 recorded during the like period last year. Rapid increase in the number of private cars and motorbikes in the urban areas is the main cause for such sore.

Similarly, a remarkable surge in the consumption of liquefied Petroleum Gas (LPG) was also witnessed during the period. The sale of LPG has gone up by over 23 per cent to touch 23,165 tons from 18,778 tons last year.

The growing popularity of LPG use in the upper middle class along with the soaring numbers of gas-powered vehicles is the cause of such increase.

Index surges after five-week fall

Post Report

KATHMANDU, Jan 19: The gloom that shrouded stock trading in the Nepal Stock Exchange (NEPSE), the only secondary market of the country, for five continuous weeks as a result of dwindling investors’ confidence has been broken with the index surging by 0.84 points in this week’s trading.

The Index that opened at 258.91 points on the first day of trading Monday settled at 259.75 points at the close of trading Friday. While the Index slumped by almost 5.75 points last week, it had dropped by about 9 points, 6 points, 3 points and 6 points in the previous weeks.

On a group-wise manner, the Index of commercial banks went up to 257.76 points on the closing day against 256.96 points registered on the opening day of the week. The group’s Index had been declining in the past weeks, dragging down the whole Nepse Index.

The commercial bank group’s index last week slumped by almost 8 points. The group’s Index had declined by almost 14 points in the previous week, while the drop was over 10 points and 7 points in the previous two weeks.

Similarly, the Indices of manufacturing group and hotel group also went up to 310.64 from 304.99 points and 236.82 from 236.06 points respectively. While the manufacturing group was stable at 304.99 points throughout the last week, index of hotel group had declined marginally.

The Indices of the trading group, insurance group, finance group, and the miscellaneous group, however, tumbled to 104.09 from 105.39 points, 298.35 from 301.34 points, 295.69 from 297.06 points, and 140.70 from 146.41 points respectively.

Indices of trading and miscellaneous group were maintained at 105.39 points and 146.41 points respectively, while indices of finance group had soared marginally. Index of insurance group had tumbled marginally last week.

As usual, the commercial bank group dominated trading on the floor of the NEPSE capturing 79.31 per cent of the total trading in the week. It was followed by finance group at 14.59 percent, hotel group at 3.77 percent, insurance group at 1.87 percent, manufacturing group at 0.31 percent, trading group at 0.15 percent and the miscellaneous group at 0.01 percent.

According to the NEPSE, shares of 40 companies were traded in the secondary market. 36,457 share units worth Rs 12.35 million in total 833 transactions were traded in the day week. Last week 43,334 share units valued at Rs 12.65 million in total 400 transactions were traded.

Share transaction during the week was dominated by Oriental Hotels Ltd. A total of 370 share units of the hotel were dealt with in 71 transactions this week putting it at the top in terms of the number of share units traded and number of transactions.

However, it is the Nepal Bangladesh Bank that topped the list of share trading in monetary terms. Its total value of transactions in the week stood at Rs 2.04 million.

The NEPSE remained open for all five days of the week. Companies whose shares were traded throughout the week are Nepal Bank, Nepal SBI Bank, Nepal Bangladesh Bank, Everest Bank, Bank of Kathmandu, NIC Bank, Nepal Merchant Banking and Finance, Nepal Bangladesh Bank and Leasing and Oriental Hotels.

While Nabil Bank, Neco Insurance and Lumbini Finance and Leasing had share trading for four days, Bottlers Nepal, Salt Trading, National Life and General Insurance, NIDC Capital Markets, National Finance, Nepal Housing Development Finance, Hisef Finance, Goodwill Finance and Necon Air had share trading only one day of the week.