National 5 (Spotlight Weekly)

Decision Overdue

How long can this impoverished country continue to subsidize the petroleum products?

By A CORRESPONDENT

A petrol pump : Spiraling prices

At a time when the prices of petroleum products in the international market have hit the roof surging beyond the US$ 45 per barrel; Nepal can no longer afford to continue subsidize the petroleum products, say many economists.

In the last one month the government did hike the price of petroleum products twice. But the reports state that the Nepal Oil Corporation (NOC) would still be losing Rs 450 million per month. That is quite a huge amount for a country like Nepal.

“Instead of subsidizing the petroleum products, the money should be used in the socio-economic development of the country. Health and education sector are in greater need of such help,” said an economist.

But the decision to do away with the subsidies in petroleum products seem easier said than done. Immediately after the decision to hike the price, people from various walks of life deplored it led by political parties and student unions.

The NOC had hiked the price of diesel, kerosene and the cooking gas based on the recommendation of the committee formed to suggest ways to improve the financial position of the NOC last week. This decision followed its earlier decision to increase the price of petrol and cooking gas.

The NOC has been bleeding due to the persistent increase in the international price and stagnant price in the domestic market. The price of diesel and kerosene has been raised to Rs 35 per liter (from Rs 31) and Rs 28 per liter (from Rs 24) respectively. The price of cooking gas has been raised by Rs 25 per cylinder to reach Rs 750. The petrol costs Rs 56 per liter.

The committee has also suggested periodic hike in the price of the petroleum products so as to make them compatible with their price in the international market by the end of this year. At present, due to crisis in Iraq and turmoil surrounding Russian oil company Yukos, the price in international market is refusing to come down hitting hard to economies of many countries around the world.

Meanwhile, in order to rescue the NOC, the government has overturned its earlier policy and has decided to stand guarantee to get loan for the Corporation from the banks and financial institutions. Earlier, the Ministry of Industry, Commerce and Supplies had requested the Ministry of Finance to provide Rs 1.6 billion to the NOC – which needs the amount to pay to the Indian Oil Corporation (IOC). The finance ministry was asked to arrange the fund either through releasing the amount from the Debt Relief Fund (provided by Japanese government) or by standing as a guarantee so that the financial institutions would give loan to the NOC.

Although the government had framed a policy not to stand guarantee, it made the exception in case of NOC because of dire financial condition of the latter and the possible shortage of petroleum products in the market. Although the NOC has increased the price of petroleum products twice in the last one month, it is stilly running in loss, officials said. Of late, even the banks and financial institutions, showed little interest to help the NOC stating that they would need government as guarantee before doling out the loan.

Nepal Upsets Vietnam

In what be called a rare news in Nepalese football sector, its youth team was able to topple regional giant Vietnam in a closely contested match.

The Under 20 youth team of Nepal created an upset of sorts by defeating Vietnam 1-0 in the ongoing Youth Championship held by the Asian Football Confederation (AFC) in Malaysia on September 27.

Pradeep Maharjan hit the solitary goal on 62nd minute when Nepal was awarded a penalty. Earlier, Nepal had played remarkably well to lose to Japan 3-0 – which is considered to be quite a low margin given the top class quality of Japanese players. Now, Nepal will play with Malaysian team on September 29.

Nepalese team coach Shyam Thapa said although the result was unexpected, Nepalese team deserved the win with the way they played throughout the 90 minutes. “Vietnam is a strong team in Asia. We are happy to defeat them,” he said. With these results, Nepalese team can now expect to enter into quarter-finals if it can only reach draw with Malaysia.

Young Nepalese players like Maharjan, Yugal Kishore Rai, Anjan KC, goal-keeper Bikas Pandey have proved their caliber in the tournament.