Govt mulls VAT waiver on oil imports

KATHMANDU, DEC 13 -

The government is preparing to waive off value added tax (VAT) on petroleum imports.

Minister for Commerce and Supplies Lekh Raj Bhatta said the Prime Minister’s Office (PMO) and Finance Ministry have responded positively to the proposal forwarded by the Ministry of Commerce and supplies. “Both the PMO and Finance Ministry are positive to waive VAT on petroleum imports for a certain time,” Bhatta said.

According to a source at the Supply Ministry, the government is considering waiving off VAT for a certain time, as it is not in a position to write off NOC’s loans. The Supply Ministry had recently proposed the government to waive off NOC’s loans. As of now, the state-owned oil monopoly’s outstanding loans stand at Rs 19 billion.

Petroleum is the government’s largest revenue earning commodity. It raised Rs 12.82 billion revenue from the crisis-ridden state-owned oil monopoly for petroleum imports in the last fiscal year.

Meanwhile, responding to the criticism over dual pricing on diesel, Bhatta said his ministry would find out a solution to the dual pricing on diesel enforced on Saturday within 10 days. The private sector has demanded an immediate roll back of the ministry’s decision.

Minister Bhatta made the remark during his meeting with a delegation of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) on Monday.

“The decision will not be cancelled as NOC is not in a position to provide subsidy to big industries and projects. I, however, will find out a solution to address the private sector’s concern,” said Bhatta, adding that diesel price will be adjusted in between Rs 76 per litre for general people and the hiked Rs 94.57 per litre for bulk buyers.

Nepal Oil Corporation had hiked the price of diesel to Rs 94.57 per litre for bulk purchasers such as factories, hotels, foreign missions and development projects enforcing a duel price system. As Minister Bhatta is leaving for Switzerland to participate in

the eighth World Trade Organisation (WTO) Ministerial Conference scheduled on December 15-17, the duel pricing issue is likely to be talked after his arrival on December 19. A delegation of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) met Bhatta to discuss dual pricing on diesel and urged him to provide subsidy on the fuel.

“We (the FNCCI) met the minister and he was positive to address our concern,” said FNCCI Vice President Pashupati Murarka.

At the meeting, minister Bhatta told the FNCCI delegation to talk to the Industry Ministry and Finance Ministry on the subsidy.

The FNCCI on Sunday had strongly criticised the government’s move to enforce dual pricing on diesel, saying it could hurt industrial production already hit by power shortage.

According to Murarka, industries that need large amount of electricity will collapse. “We were forced to use diesel as government failed to provide electricity,” said Murarka. “Hence, we are asking for subsidy on diesel.”

Source: Kantipur