NOC in no mood to cut fuel prices

blog

By Laxman Kafle, Kathmandu, Aug. 9: Price of crude oil has been declining in the international market for the last couple of weeks. The price of crude oil which climbed to USD 123.58 per barrel on March 8 dropped to USD 94 per barrel on Monday.

The Nepal Oil Corporation (NOC) has received a new price list from the Indian Oil Corporation twice after the significant fall in the prices.

The IOC has reduced the price of diesel and petrol supplied to Nepal by Rs. 30 per litre in a month.

No cut in price in Nepal 

However, the NOC has decided not to adjust the prices of petroleum products this time.

Even though IOC has sent the price list with a significant reduction, the Corporation will not adjust the price immediately as the corporation is still in a huge loss and has to pay dues to pay the Indian Oil Corporation (IOC), said the NOC sources.

According to the latest price list received from Indian Oil Corporation, the Corporation has a profit of Rs. 2.78 per litre on petrol. Apart from this, there is a profit in kerosene and aviation fuel.

However, NOC is still facing a loss of Rs. 9.37 per liter in diesel and Rs. 499.57 in a cylinder of cooking gas. Citing these reasons, the Corporation said that it would not adjust the price of petroleum products immediately.

The NOC has been incurring a loss of over Rs. 1.2 billion a month from the sale of petroleum products.

“If we reduce the price of petrol marginally, the NOC has to increase the price of diesel and cooking gas significantly. If we do so, there will be an additional burden on the consumers,” Binit Mani Upadhyay, spokesperson for the NOC, said.

According to him, the NOC had earlier adjusted fuel prices to minimise the losses of NOC following the auto-pricing system, “If we reduce the fuel price based on the new prices received from IOC, the NOC’s loss will increase further,” he told The Rising Nepal.

The NOC still has to pay Rs. 23 billion to IOC for the fuel it imported, said NOC.

He, however, said that the price of refined fuel price has not reduced in line with the crude price fall in the international market.

In this situation, the Corporation cannot cut fuel price immediately, he said.

Upadhyay said that the NOC will reduce fuel price if the price of refined fuel is reduced in the coming days as the NOC is working in favour of people and the nation.

Currently, the NOC is selling a litre of petrol at Rs. 181, diesel and kerosene each at Rs. 172 and LPG at Rs. 1,800 per cylinder.

Earlier, the NOC had adjusted fuel prices 14 times in eight months from January 2022.

NOC must reduce prices for public trust 

Economist Dr. Chandra Mani Adhikari, however, said that the NOC should reduce the price of fuel following the auto pricing system.

“If the NOC reduces fuel price in line with the new price list received from IOC, it will help increase public trust in the government and NOC. Besides, it will help to control the price hikes of goods and services and accelerate economic activities in the country,” he said.

According to him, the government should think broadly instead of only institution while adjusting fuel price because the fuel is a lifeline for the economy. “When the fuel price drops, it will play a significant role to reduce prices of goods and services and project costs. The government can collect more revenue when the economy is accelerated and it can recover the loss of NOC from revenue,” he said.

Stating that the price of crude oil has been declining in the international market for the last few weeks, he said that the NOC should reduce fuel price.

However, he said that it is not possible to predict the rise and fall of oil prices in the future.

“The present international scenario shows that the price of fuel may drop to around USD 50 per barrel, may be up to USD 130 per barrel and remain at around USD 100 per barrel. The Russia-Ukraine war is not a war between two countries, it is a war between strong economies. So, it may take any shape anytime and cause ups and downs in fuel price,” he said.

The price of fuel had started to increase in the international market after Russia attacked on Ukraine in the last week of February.

 
How did you feel after reading this news?