KATHMANDU: Already reeling under the strains of protracted power shortage, the country’s energy crisis is often augmented by chronic shortage of petroleum products. The government needs to develop alternative energy sources besides overhauling the functioning of Nepal Oil Corporation (NOC).Petro problemsDemand of petro products is on the rise despite upward spiral in the price. According to an NOC record, import of petro products increased by 17.67 per cent in 2010/2011 compared to the preceding fiscal year. With no addition
in hydropower capacity of the country for some years to come, demand of petro products continues to surge as
factories depend on the fossil fuel. It is no surp-rise that the import of petro products alone overweighs the total
exports of the country as reflected by a Nepal Rastra Bank’s (NRB’s) record. According to provisional records of NRB, total export of the country in the year 2010/2011 was Rs 64.560 billion, whereas the import of petro products in the same year stood at Rs 76.716 billion.
Frequent price hikes by NOC, the state autonomy, in trading petro products citing the international market trend has added to the economic burden of consumers. Though willing to purchase the expensive fuel, obtaining petro products is a tough luck during shortages that often last for weeks. As soon as NOC declares its inability of a smooth supply, dealers across the country halt distribution, only to resume it following a price hike. Accepting the annoying drama has become a common norm of the people at the receiving end. “NOC asks for subsidy and loan time and again and the government responds. Despite any natural calamities and war time situation, fuel crisis emerges all
of sudden. The government needs to think of a long-term solution,” says Tirtha Man Shakya, former chief secretary to the government.
NOC, like other public enterprises, is criticised for poor management, over staffing and corruption resulting in its weak
economic health. However, Suresh Kumar Agrawal, acting managing director of NOC, blames ineffective pricing system for NOC incurring losses. “We purchase at a higher price and sell at a lower price against business practices. NOC will profit if it can operate on auto price mechanism, that is, if we are able to sell our products with even one per cent addition on the procurement cost,” says Agrawal. NOC’s loan is Rs 23.17 billion and its accumulated loss stands at Rs 19 billion.Given the volume of transaction in a country with small economy like Nepal, setting up a refinery by importing crude oil is not feasible at least for few more years. Thanks to its current state of infrastructure, Nepal is left with no other option than importing oil from India. “Owing to its distribution networks, logistics and efficiency, Indian Oil Corporation (IOC) is the only company that provides NOC with petro products at minimum price,” asserts Nuta Raj Pokhrel, under secretary at the Ministry of Commerce and Supplies.While adequate hydro power generation will mitigate the problem of petro products in the long run, Pokhrel says petrol consumption needs to be reduced by replacing small vehicles in the cities with larger ones that have bigger passenger capacity. Price control by the government and promotion of bio-fuel are other solutions to petro problems, according to Pokhrel.Bio-fuel basicsJalpatra is the only suitable source of bio-fuel for Nepal, where food security is an issue. Researchers assert that the country’s suitable climatic conditions support commercial cultivation of this crop. “Jalpatra can be cultivated in 40 districts of the country and has proven highly successful in mid hill districts,” says Dr Khem Raj Bhattarai, a researcher specialising in Jalpatra. Bhattarai, who is associated with Everest Bio Diesel Company, informs that some 10 million Jalpatra saplings have been planted in districts, including Gorkha, Dhading, Parbat and Kaski at the company’s initiation. Oil from Jalpatra has been extracted and successfully tested in vehicles, according to Bhattarai.Though bio-diesel does not give the same mileage as fossil fuel, it is efficient in terms of reducing pollution, according to Narayan Prasad Adhikari, bio-fuel programme coordi-nator at Alternative Energy Promotion Centre (AEPC). Two of the processing plants of AEPC established in Palpa and Chitwan districts are lying idle due to lack of feed stock, as informed by Adhikari. Normally, a Jalpatra plant begins to bear seeds between two to four years and takes eight to 10 years to reach maturity. A plant continues to yield seeds for 50 years.“Bio-fuel from Jalpatra will be a debacle if the government fails to address the price factor,” warns Ram Krishna Karki, chairman of Manigram Agro-forestry and
Research Centre Pvt Ltd in Rupandehi district. The company has some 2,500 Jalpatra plants spread over 10 hectors of land. “Last year, as a pilot project, the processing plant in Palpa bought Jalpatra seeds at Rs 10 per kg. The current market price for the seeds could range between Rs 10 to Rs 15. However, that will push farmers into the abyss of loss,” says Karki, a retired officer who was earlier engaged in the District Forest Office, Rupandehi.Karki also informs that only 34 per cent of a Jalpatra seed yields oil. Unless the government comes up with a
package of utilising the rest by either converting it into compost manure or pesticide, Jalpatra farming will not attract farmers, he says. Even if commercial farming of Jalpatra yields success by being backed by a well planned strategy, commercially produced bio-fuel can
only reduce diesel consumption by few per cent but cannot be a substitute.New silver liningsAmidst the dark clouds looming large in terms of petro crisis, there is a silver lining of exploiting the fossil fuel from beneath the count-ry’s soil. Petroleum Exploration Promotion Project (PEPP), an undertaking of the Ministry of Industry, has long identified 10 blocks that could possibly bear reservoirs of fossil fuel for commercial exploitation. The blocks in Terai and Siwalik belt running along west to east of Nepal promise a huge potentiality of petro products, according to Shyam Bahadur KC, a geologist at PEPP. “The oil reservoirs at Potwar Basin in Pakistan and Assam Basin of India share
similar geographical his-tories with the Terai and Siwalik belt,” says KC.Foreign companies are assessing the possibility of fossil fuel in seven blocks, whereas PEPP is working to issue licence to foreign companies for remaining three blocks, according to him.“Based on the exploration work, I am 100 per cent optimistic about discovering petroleum,” says Prabhat Yonzon, resident representative of Texana Resources Comp-any, that is working on block three (Nepalgunj) and block five (Chitwan). The company has completed geological survey of both the blocks with positive results. “Seismic survey will reveal the prevalence of petro products and the drilling will commence thereafter,” says Yonzon. “If the works conti-nue unhindered and if we are lucky, Nepal could be extracting crude oil by 2015/16,” says an optimistic Yonzon.
Immediate measuresOpening petro business to private sector is a part of short-term solution. Pokhrel says that the government is planning to issue licence to few private bodies. However, the government needs to develop a strong monitoring mechanism and actually start by relieving people duped by petrol dealers indulged in cartel. Agrawal informs the works to transport fuel from India through pipe line will
begin this year, but the commitment needs to transpire into action. As suggested by Shakya and proposed by NOC, the government needs to create a stable fund for the import of fossil fuel by ensuring transparency in NOC’s transactions so that its profit accumulates into the revolving fund. In case of a loss, the fund could then be used to ensure smooth supply of petrol.