NOC hikes petroleum products' prices yet again
KATHMANDU:
Prices of everything from food products and construction materials to transport and air fares are expected to go up in the coming days, as the government has raised prices of petroleum products by up to eight per cent.
The board of state-owned Nepal Oil Corporation increased the price of petrol by Rs 10 per litre and diesel, kerosene and aviation fuel for domestic airlines by Rs 6 per litre with effect from today ‘to cover up losses’. With these revisions, petrol will now cost Rs 140 per litre, diesel and kerosene Rs 109 per litre and aviation fuel for domestic airlines Rs 143 per litre. Price of liquefied petroleum gas, however, remains unchanged at Rs 1,470 per cylinder.
“We had to adjust the prices to minimise our losses, which are piling up as international price per barrel of oil has increased by $ 5-6 since we revised oil prices around six months ago. Also, devaluation of Nepali rupee vis-a-vis US dollar has raised our burden, as we have to pay more Nepali rupees while purchasing oil from India,” said NOC spokesperson Mukunda Prasad Ghimire.
Until yesterday, NOC’s monthly loss stood at Rs 1.69 billion largely because it was incurring a loss of Rs 10.30 on sales of per litre of diesel and Rs 864.92 on sales of per cylinder of cooking gas. Today’s price adjustment will lower NOC losses but they still stand at Rs 1.05 billion per month. This is because it is still incurring losses in sales of diesel and cooking gas.
While the latest price revision has provided NOC some cushion, it is expected to affect consumer prices.
“Oil price hike will have a cascading effect and cost of production will go up,” senior economist Posh Raj Pandey said. This is because Nepal has been experiencing up to 12 hours of power cut daily. This is forcing around 50 per cent of firms to either own or share a generator to run their factories, states the Enterprise Survey 2013.
“This, however, does not mean we should continue subsidising petroleum products, as most of the subsidy meant for the poor is being used by middle-, upper-middle- and high-income groups,” Pandey said.
A survey conducted around seven years ago had shown that high-ranking officials working for international non-government organisations were enjoying fuel subsidy of around Rs 20,000 per year just to move around in their vehicles, while those in lower- and lower-middle-income groups were receiving only several hundred rupees.
“In this context, direct cash transfer to the needy would be a better option. But for this a system of checks and balances should be made effective to lower incidences of corruption,” Pandey said.
Also, market monitoring should be intensified, a high-ranking official of Nepal Rastra Bank said on condition of anonymity. “This should be done to ensure prices of goods and services are being raised based on weightage of fuel component in production process and not with the motive of profiteering,” the official added.
Source: THT
