National 2 (Spotlight Weekly)

Hard Decision

The government mulls raising the price of petroleum products

By A CORRESPONDENT

Even as the subsequent governments feared to raise the public hackles by putting off the long overdue decision to raise the price of petroleum products, the state-owned Nepal Oil Corporation (NOC) continued to bled.

After the news came out that the NOC was becoming virtually bankrupt, the government finally seems to have dragged its feet to address the problem.

The government spokesperson and Information Minister Dr. Mohamad Mohsin, hinted that the government could take a hard decision (of raising the price) anytime soon.

The NOC is said to be losing Rs 20 million a day because the government has not been able to decide on raising the price of petroleum products even as their price in the international market has been sky-rocketing over the past couple of months.

According to latest data, the NOC is losing Rs 580 million every month. The NOC has completely spent Rs 2 billion that was in its oil pool reserve. For the past couple of months, it has been buying oil by taking loans from the banks. It also needs to pay Rs 2.17 billion to the Indian Oil Corporation (IOC).

For the past 15 months, the price of petroleum products in the domestic market has remained unchanged despite the spiraling price in the international market. Due to this bleeding of fund, the NOC is almost bankrupt. Its liabilities far outweigh its total asset. Currently, its fixed asset is valued at Rs 500 million and it has the oil reserve of the value Rs 1.2 billion.

In order to sail over the problem of fund crunch, the Petroleum Products Price Review Committee had recommended for 8 to 10 percent increase in the products six months ago. However, due to fluid political situation, the decision could not be taken. Sources say that the committee is again engaged in homework to hike the price of petroleum products.

According to a member of the committee, NOC bears monthly losses of Rs 236.8 million in the sales of kerosene; Rs 210 million in the sales of diesel; Rs 60 million in the sales of aviation fuel and Rs 90 million in the sales of LP Gas. The sales of petrol, however, result in Rs 25 million profit. In the past fifteen months, the Indian government has already increased price of petroleum products five times.

Regional Conference

With the objective of focusing on environmental security from the perspective of rights to natural resources and their impact on livelihood security, the World Conservation Union (IUCN) organized a conference on “Livelihood Security and Resource Rights in South Asia” on August 5-6, in Kathmandu.

The conference aimed to identify the ‘missing link’ between poverty, environmental degradation and conflict. “Over the past year, IUCN’s Regional Environmental Law Program, Asia (RELPA) has been undertaking a study of the relationship between rights to natural resources and livelihood security in two types of ecosystems and four countries in South Asia: wetlands – Bangladesh and Nepal; and forests – India and Pakistan,” states the press release of the IUCN.

The project study areas were Taguar Haor in Bangladesh; Kosi Tappu in Nepal; Koraput, Orissa in India; and Dir Kohistan in Pakistan.

Findings from the field work were presented and discussed during the conference. All four country studies and the conclusions drawn from them will be presented at the IUCN World Conservation Congress to be held in Bangkok in November 2004.

Project results will contribute to national and sub-regional policy processes by providing data and conclusions that can be used by policy and lawmakers, implementers, and civil society. This project results will also provide policy inputs for the international donor community.