Economy cannot afford fuel subsidy, PM admits

KATHMANDU, JAN 29 -  

With the Nepal Oil Corporation (NOC) struggling to ensure smooth supply of petroleum products and seeking government subsidy, Prime Minister Baburam Bhattarai has admitted that the economy cannot afford to subsidise fuel.

There is a need of a national commitment for fuel price adjustment as per the international market price, said the Prime Minister at an interaction with economic journalists here on Saturday. “The government cannot provide subsidy on imported products,” said Bhattarai. “We must reach a national consensus on the matter.”

Bhattarai also said that the government is considering introducing a legal framework to enforce energy emergency for a certain period until the country is able to produce 2,500MW electricity. Stating that foreign investments will not come unless the power crisis is addressed, the Prime Minister said such an emergency arrangement is necessary. 

Amid criticism over the Immediate Action Plan (IAP) introduced on Thursday that has repackaged the existing programmes in the annual budget, Bhattarai defended IAP, but accepted that it does not include new programmes. “Though the programmes are the ones that have been mentioned in the annual budget, IAP has highlighted the government priorities,” said Bhattarai at an interaction with economic journalists here on Saturday.

“As IAP was to be introduced in the middle of the fiscal year, we were not in a position to introduce new ideas,” said Bhattarai. “Therefore, we have tried to prioritise existing programmes staying under the budgetary allocation.”

Introduction of IAP, according to the Prime Minister, is to ensure people that the government is serious about development. “The IAP has been brought by keeping growth, employment and social justice at the centre,” said Bhattarai.

The target of bringing in $1 billion foreign investment within next six months—as mentioned in IAP—is possible, according to Bhattarai. “If we start a few mega projects, the target is not an ambitious figure,” said Bhattarai.

Bhattarai was candid when he said that the revolutionary leap for economic development and prosperity was not possible given the current state of the country. Thus, the government, according to Bhattarai, is working for general reform measures so as to give immediate relief to the people. “With a coalition government in place, we cannot do much,” Bhattarai said candidly.

The Prime Minister was of the view that along with domestic investment, foreign investment is also needed to stimulate economic growth. The signing of the Bilateral Investment Promotion and Protection Agreement (BIPPA) with India, according to Bhattarai, is an attempt to give a message that large foreign investments are required for faster economic growth. 

Amid differences within the Maoists over foreign investment, Bhattarai made it clear that promoting foreign investment and their security is his party’s official policy. “Until we are not self reliant, we need foreign capital,” said Bhattarai. With his own party divided over Indian investment in the hydropower sector, the Prime Minister said efforts are being made to reach a consensus on the matter.

Saying that the country transformation is not possible without commercialisation of agriculture, he said he has directed to double the agriculture budget next year.

According to the PM, purchasing two aircraft for the Nepal Airlines Corporation (NAC) is one of the government’s top priorities. “Restructuring of NAC and aircraft purchase will be carried out this year,” said Bhattarai.

Source: Kantipur