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Artificial fuel shortage hits Valley

  Private pump owners delay buying products from NOC awaiting price-cut


Vehicles queuing outside Nepal Army fuel depot in Bhadrakali after most of the private petrol pumps were shut in the valley on Friday.


KATHMANDU: Motorists and motorcyclists were elated this afternoon when the Nepal Oil Corporation reduced price of petrol by seven rupees per litre, and those of diesel and kerosene by Rs 5.50 each per litre. But when they rushed to fill their tanks their happiness turned into frustration, as many fuel stations operated by the private sector were not selling petroleum products, while government-run pumps had serpentine queues in front of them.

Surprisingly, petrol pumps, mostly run by the private sector, usually ‘run out of stock’ around the time when NOC is about to announce reduction in prices of petroleum products.

This has happened ever since the NOC introduced automatic pricing mechanism in petroleum business in September, and it happened today as well.

As a result, motorists and motorcyclists had to wait in serpentine queues in front of government-run fuel stations, although there was plenty of fuel in NOC depots.

The problem has been recurring because most of the private petrol pumps can easily guess when NOC is reducing fuel prices. And as they get this hint, they stop collecting petroleum products from NOC’s depots and wait until the prices fall so that they can buy the same product at cheaper prices.

NOC had earlier warned to take action against pumps that refrained from collecting petroleum products days before formal price reduction. But it has not been able to punish such stations due to lack of a clear-cut regulation.

“Fuel stations are taking undue advantage of vacuum created by lack of regulation, as they are free to choose whether they want to buy petroleum products,” Jyoti Baniya, general secretary of the Forum for Protection of Consumer Rights, told The Himalayan Times.

He added, “Action can only be taken against them if they are found hoarding petroleum products, not when they are not buying products from dealers.”

Not surprisingly, different market monitoring teams of NOC, and the Department of Commerce and Supply Management, comprising consumer rights activists, could not do anything to fuel stations that were not selling petroleum products today.

“All they could do was check whether the fuel stations were selling petroleum products at revised rates,” NOC Managing Director Chandika Prasad Bhatta said.

Baniya said the only way to bring a halt to this problem was to enforce Petroleum Act. “This Act should clearly mention what should be done to manage the supply of essential commodities like petroleum products and regulate activities of players engaged in petroleum business,” Baniya added.

Around 118 petrol pumps, including those run by the state, are operating in the Kathmandu Valley.

Revenue collection might be hit

As fuel prices are falling, the government has started to worry that its revenue collection might be hit, because petroleum products contribute to around 19 per cent of the country’s total imports. “Free fall in oil price may hit collection of value added tax and customs duty,” said Shishir Kumar Dhungana, newly appointed director general of the Department of Customs. “But that impact may be cushioned if the country starts importing bigger quantity of those fuels.” Import of petroleum has been increasing every passing year. The country imported petroleum products worth Rs 134. 41 billion in fiscal 2013-14, as against Rs 111.13 billion in 2012-13.

Petroleum prices reduced

Nepal Oil Corporation on Friday cut prices of petrol, diesel, kerosene and aviation turbine fuel, without making any change to the price of liquefied petroleum gas, or cooking gas. A board meeting of NOC held Friday afternoon reduced the price of petrol by Rs 7 per litre, and the prices of diesel and kerosene by Rs 5.50 each per litre. With this revision, petrol will cost Rs 116 per litre, while diesel and kerosene will cost Rs 92 per litre each. In addition, ATF (for domestic purpose) will cost Rs 133 per litre, following reduction of Rs 10 per litre. These revised rates came into effect from the second half of Friday. “NOC’s decision to bring down petrol, diesel and kerosene prices by over five per cent is probably the biggest reduction in NOC’s history,” said NOC Spokesperson Mukund Ghimire. After these price adjustments, NOC’s monthly profit will fall to around Rs 485.9 million from Rs 510 million, according to Ghimire. NOC generates a profit of Rs 10.89 on the sale of every litre of petrol, Rs 1.32 on sale of every litre of diesel and Rs 12.36 on sale of every litre of kerosene. However, NOC still incurs a loss of Rs 290.76 on sale of every cylinder of cooking gas.

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