NATIONAL 6 -(Spotlight Weekly)]

Hard Days Ahead

Opposition parties protest the hike in the POL products but officials say they had no other alternative

By BHAGIRATH YOGI

The season of protest seems to have begun. As soon as the price of petroleum products were increased last week, a number of leftist parties, including the main opposition UML, have announced their protest programs. "The recent hike shows that this is an irresponsible government," said UML general secretary Madhav Kumar Nepal, who rode a bicycle leading a delegation to hand over a protest letter to the Prime Minister. The other opposition groups as well as consumer organizations have asked the government to withdraw the price hike.

Will it do? Officials at the Nepal Oil Corporation (NOC), that enjoys monopoly in the import and sales of petroleum products in the country, insisted that they were compelled to raise fuel prices due to hike in price of fuel in the international market.

NOC had 'adjusted' the prices of diesel and kerosene on the basis of the international price of US $ 195 for a metric ton of diesel and US $ 225 for a metric ton of kerosene only last year. But this year the international price of diesel and kerosene soared to US $ 350 and US $ 380 per metric ton respectively last month. As the prices of petrol and LPG had also gone up, the state-owned entity had little option than to follow suit.

The officials were in the tight spot as the people were preparing for Dashain, the biggest festival of the Nepalis. But as soon as the Dashain was over, the NOC announced the hikes within days of similar hike by the Indian government.

Though consumers in general had anticipated hike in fuel price, they were taken aback to see up to 100 percent hike in the sales price of kerosene. The NOC raised the price of petrol from Rs 40 to Rs 47 per litre (17.5 percent increase), diesel from Rs 23 to 27.50 per litre (19.5 percent), kerosene from Rs 13 to Rs 26 per litre, and LPG from Rs 467 to Rs 550 (18.2 percent) per cylinder effective from Saturday midnight (Oct. 14).

Anticipating strong protests from opposition parties and consumer groups, the government said that it has made arrangements to provide three litres of kerosene per family at Rs 15/50 per litre every month through ration cards all over the country. "We will still suffer a loss of Rs 9.75 per litre while selling kerosene at Rs 15.50 per litre under the ration card," said Sharma.

Critics say the provision may prove not more than a popular gimmick as Nepal doesn't have a reliable and functioning public distribution system. Prime Minister G. P. Koirala hinted on Monday that the government could reconsider its decision after listening to the reasons for price hike from concerned officials. Sources said the government may be compelled to revise the price of kerosene as it is used for lighting lamps in rural areas and to cook food in the urban areas by low income families.

Officials, on the other hand, say the government's options are very limited. "We would have to suffer a loss of Rs 3500 million in the current fiscal year if adjustments were not made in the prices of POL products in line with the international market price," said Madan Raj Sharma, managing director at the NOC. "We will still suffer a loss in the transactions of kerosene, diesel and LPG even after adjustment in prices of these products," he added.

According to NOC, the annual consumption of kerosene, diesel and petrol in the country stands at 350,000 kilo liters, 340,000 kilo liters and 60,000 kilo liters respectively. Similarly, the annual consumption of LPG stands at 36,000 metric tonnes.

Meanwhile, transport operators have said they will raise transport fares unilaterally if the government doesn't allow them to revise the existing rates. This means that fares for public transport and for carrying goods will go up. While it will erode the competitiveness of Nepali export products, it would also result in general price hike. So, be prepared for hike in prices in goods and services that are available in the market.