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| Kathmandu, Thursday March 27, 2003 Chaitra 13, 2059. |
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Address
root causes
The government has
hiked the prices of petroleum products substantially in order to cope with the
inefficiency of the Nepal Oil Corporation (NOC) and the failure of successive Nepalese
governments to address the root causes of the oil pricing problem in Nepal. NOC hiked the
prices of petrol, diesel, kerosene and cooking gas following a government decision. The
hike in prices of kerosene is expected to be hard especially for the people whose per
capita income dithers between 230 to 242 dollars. However, for a large chunk of the
population, almost fifty per cent who live in absolute poverty, the price hike in kerosene
and diesel will be very hard. Kerosene is used as cooking fuel in the majority of Nepalese
houses and the 10 litres per month per family allowed by the government cannot but have a
crippling impact on them. In addition, the rural people will again begin to turn to woods
for cooking purposes, heralding yet another ecological disaster. The reason for NOC
wanting to hike the prices of POL products can be understood in view of the fact that the
prices of these products in areas bordering Nepal in the south were lower. As a result,
much of the POL products in southern Nepal were being smuggled out to India where they
fetched higher prices. Tuesday’s price hike virtually brought the prices of these
items at a par with India, and therefore eliminated the chances of POL products being
smuggled across the border as were done in the past. Nevertheless, political parties are
bound to oppose this move, which think being populist is being popular. The government
might have given the political parties the needed ammunition, in the form of price hike,
at a time when their popularity is virtually touching the nadir.
The open border has
again emerged as the problem for this country and denied the people the availability of
POL products at rates lower than those in India. This despite the fact the governments
were willing to invest some amount of taxpayers’ money in subsidising the products.
Such subsidies in fact flow to the Indian people when these products are easily smuggled
out. The open border in the past has been blamed for the rise of the armed Maoist
insurgency, the criminal elements entering one country from another, and above all Nepal
has been blamed by India for letting anti-Indian elements use the open border. The open
border is one of the root causes for the present price hike. While there is no guarantee
that regulated Nepal-India border will stop smuggling but it will certainly reduce such
smuggling. But regulating the border is something that the present government can hardly
be expected to undertake. Democratically elected governments in the past twelve years and
the Panchayat governments before that could not do so. Maybe a strong party government in
future might at least initiate some steps in this direction. Apart from the open border
and easy smuggling, other factors have also contributed to the price rise. The NOC must be
forthcoming in telling the people how it came to the pricing – which now must be the
same as those in bordering areas in India or above Indian prices. How much does NOC pay
the Indian Oil Corporation for processing and other charges? Is the payment justified? The
country’s state monopolist must also look at its own front and streamline its
structure and staff so that it is able to compete with the private sector, which is soon
to be allowed to trade in POL products. Since NOC cannot bring down the prices of POL
products, even if it wants on account of the prices in India, the state monopolist and
future private enterprises must find ways and means to pass on benefits accrued to the
consumers. For no government can allow any company to make more profits than what are
warranted. |
