KATHMANDU: The state-owned Nepal Oil Corporation (NOC) has lately been dillydallying in implementing the Automatic Fuel Pricing Mechanism (AFPM) — the mechanism that demands automatic adjustments in fuel prices in line with international fuel prices.
Ignoring the directives of the Office of Prime Minister and Council of Ministers (OPMCM) and Parliamentary Committee on Industry, Commerce and Consumer Welfare to reduce fuel prices, the oil monopoly has not made any adjustments to prices since mid-February, though the AFPM, introduced in September 2014, makes it mandatory for NOC to adjust fuel prices every fortnight. By not adjusting the prices, NOC has been making enormous profits on most petroleum products.
NOC has been defending its failure to reduce fuel prices arguing that the prices are already lower in Nepal compared to the prices across the border in India and that significant price reduction here can encourage smuggling of fuel from Nepal to India. “Petrol and diesel in Nepal are cheaper by Rs 6.5 per liter and Rs 10 per liter respectively compared to the prices in Raxaul,” NOC spokesman Mukunda Ghimire said.
Ghimire also said that fuel price this time was not reduced as Indian Oil Corporation (IOC) has slightly increased prices of petrol and diesel in its latest price list sent to the NOC. According to him, IOC has increased the prices of petrol and diesel by IRs 1.22 per liter and IRs 1.33 per liter respectively for April 1-15.
By dillydallying in reducing fuel prices and in making timely price adjustments as per the AFPM, NOC has been making more than Rs 300 million profit every month. Like a profit-making organization, the NOC has been keeping high profit margin in different petroleum products. As per IOC’s fuel rate for April, NOC is making a profit of Rs 14.74 per liter in petrol, Rs 14.53 in diesel, Rs 23.27 in kerosene and Rs 13.42 per liter in aviation turbine fuel (ATF).
Some consumer rights activists have termed NOC’s unwillingness to implement AFPM as an attempt to clear government loans as soon as possible and distribute bonus to its staff. NOC whose loans to government and various financial institutions had once reached over Rs 30 billion has recovered dramatically in recent years by profiting from the difference between international and domestic fuel prices. As of now, NOC has only 7.64 billion debts with the government.
“As NOC’s several attempts to distribute bonuses failed due to its huge accumulated losses, NOC is now trying to make up the losses by overcharging consumers,” Madhav Timalsina, president of Consumers’ Right Investigation Forum (CRPF) said.
