KATHMANDU: Nepal Oil Corporation (NOC) has not been implementing auto pricing for petroleum products consistently despite its pledge to do so. The last time the state-owned oil monopoly revised fuel prices was on February 16 even though it is supposed to update the rates every two weeks as per the tariff sent by Indian Oil Corporation (IOC).
NOC should have issued three new price lists since then if it had adhered to its schedule. It received the latest tariff from its sole supplier IOC on Monday. NOC started implementing auto pricing for petroleum products in September 2014.
With regards to liquefied petroleum gas (LPG), IOC revises prices every month. NOC has not implemented auto pricing for cooking gas, but says it plans to do so. The corporation cited continuing shortages since the Indian trade blockade for postponing the auto pricing system.
NOC’s Acting Deputy Managing Director Sushil Bhattarai said that they hadn’t implemented the automatic price adjustment system as the country was still reeling under fuel shortages.“Now, prices have gone up slightly in the international market, but we didn’t want to hike prices here in such a situation,” he said. NOC didn’t adjust prices downward when global oil prices were in freefall either.
The corporation has received the latest price list from IOC, but it is yet to reach a decision on the matter. Spokesperson for NOC Mukunda Ghimire said the board had started discussions on reviewing gasoline prices. However, Supply Secretary Shreedhar Prasad Sapkota, who is also the chairman of the NOC board, said management had not yet submitted any proposal to revise fuel prices. NOC has been earning a
profit of Rs87.77 per cylinder of cooking gas by setting prices based on the price list sent by IOC on March 1. As import prices of LPG have dropped, NOC’s profit margin is likely to increase. The international price of crude oil had plunged to an all-time low of $27 per barrel, but it has been rising in recent days.
NOC said the price of crude oil on Wednesday stood at $37.87 per barrel. Ghimire said fuel prices were likely to increase this time if the corporation applied auto pricing. NOC has been accused of not lowering fuel prices when international crude prices were falling sharply in order to keep raking in profits.
Calculated on the basis of NOC’s prices on February 16, it earns a profit of Rs17.54 per litre of petrol, Rs15.81 per litre of diesel, Rs26.80 per litre of kerosene and up to Rs29.46 per litre of aviation fuel.
The surge in revenues has allowed the perennially broke corporation to repay Rs5.5 billion in debts to the government in the last two months. It still owes Rs7 billion to the government. Consumer rights activists have criticized the government for not forcing the NOC to implement the auto pricing system. Baburam Humagain, general secretary of the Consumer Welfare Protection Forum, said they were planning to file a case against NOC if it does not implement the provision as per its commitment.
