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| Kathmandu Wednesday March 20, 2002 Chaitra 07, 2058. |
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NOC to review petroleum price
monthly
Post Report
KATHMANMDU, March 19:Following Indian decision
to scrap the Administered Pricing Mechanism system (APM) in the petroleum products after
April 1st, Nepal Oil Corporation (NOC), which has been importing petroleum products
through India, is planning to rebview the domestic oil price on monthly basis.
Madan Raj Sharma, Executive Director of NOC,
told The Kathmandu Post that the monthly review of oil policy has been aimed at curbing
cross-border smuggling by adjusting oil price difference between Nepal and India. NOC
presently reviews the domestic oil price in quarterly basis.
The two-day meeting between the high officials
of NOC and Indian Oil Corporation (IOC), which ended here today, has also framed the final
draft of the agreement. "The new five year agreement will be signed by the end of
March," said Sharma. He also informed that a high level NOC delegation is visiting
India soon to sign the agreement.
After the withdrawal of APM, Indian private
sector engaged in oil business would fix the retail prices due to which oil price might
fluctuate in the line with international oil price. "If the timely adjustments are
not taken under the new arrangement, a huge oil price difference between India and Nepal
can emerge fueling cross-border smuggling. The monthly oil price review has become a
necessity to bridge such price difference," Sharma said.
The state owned NOC and IOC have been engaged in
a series of negotiations to change the three-decade-old agreement after the Indian
government announced to deregulate the prices of petroleum products. The negotiations have
been aimed at ensuring uninterrupted supplies of petroleum products to Nepal after the
roll back of the APM.
Sharma also informed that during the latest
round of negotiation, both the NOC and IOC reached an understanding on crude oil purchase
and payment procedures.
According to the agreement signed in 1974, NOC
has been importing diesel and kerosene from the international market through competitive
bidding and bartering it with all necessary petroleum products with IOC. Presently, IOC
has been supplying petroleum products to NOC from the bordering city of Raxual.
However, as per the new arrangement, NOC will
purchase crude oil from the international market and will hand over to IOC in Haldia port.
NOC then will get refined petroleum products from Raxual oil depot equivalent to price of
crude oil. NOC, however, will have to pay freight charges of IRs 1,500 per ton to
transport refined oil from Haldia refinery to Raxual.
NOC will purchase crude oil from the three
specific countries namely Iraq, Egypt and Oman. The purchasing countries will have to be
specified since the India refineries do not have facility to refine all types of crude
oil, informed NOC source.
Similarly, as per the latest understanding,
Nepal will initially import 1 million ton of crude oil for a period of one year and Nepal
will get various refined petroleum products equal to the price of the crude oil. Nepal
currently purchases 720,000 tons of refined oil from the international market and imports
through India.
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