Nepal Oil Corporation, which used to adjust oil prices based on the price list sent by the supplier Indian Oil Corporation every fortnight, kept the price unchanged despite receiving a price list reduced for two consecutive fortnights.
Ruling CPN (Maoist Center) lawmaker Aman Lal Modi on Tuesday criticized the NOC’s failure to revise fuel prices downwards in line with falling prices in the international market.
Speaking at the House of Representatives, Modi said: “Whenever India (Indian Oil Corporation) increases the prices of fuel supplied to Nepal, the government (NOC) raises the prices. But its inability to revise down based on reduced fuel prices provided contributed to inflation.
On Monday, the Indian Oil Corporation sent out a revised petroleum product price list that dramatically reduced the prices of all petroleum products. The IOC has reduced the price of petrol by around Rs.16 per litre, the price of diesel by around Rs.12 per liter and cooking gas by around Rs.77 per cylinder, according to Binitmani Upadhyay, spokesman for the NOC.
“There has also been a reduction in the prices of kerosene and aviation fuel in accordance with the IOC price list,” he said.
On July 3, the NOC had revised upwards the prices of petrol, diesel and aviation fuel (domestic) to Rs181 per litre, Rs172 per liter and Rs190 per liter from Rs179 per litre, Rs163 per liter and Rs185 per litre, respectively.
Since then, the IOC has twice sent out revised price lists with lower prices. But the state oil monopoly has shown no interest in lowering domestic prices.
“There have been discussions about whether to lower prices. But no decision has been taken on this,” Upadhyay said. “Although our fuel import costs have come down according to the latest price list sent by the IOC, we are still incurring a monthly loss of about Rs 1.3 billion.”
According to him, NOC will make a profit of around Rs2 per liter of petrol but it will continue to suffer a loss of Rs10 per liter of diesel which sells around 2.5 times that of petrol and there is also losses of cooking gas.
Fuel prices have fallen in international markets in recent weeks amid fears of recession as factory operations slow.
The price of Brent crude stood at $100.34 a barrel on Tuesday, down from around $140 a barrel in March earlier this year. In July 2008, the price of oil had set an all-time high of $147.50 per barrel.
Surveys showed on Monday that factories in the United States, Europe and Asia struggled to gain momentum in July as falling global demand and China’s tough Covid-19 restrictions slowed production .
After the government failed to honor its commitment to make a downward fuel tax adjustment, the state oil monopoly was also reluctant to make a downward price adjustment.
On June 25, the NOC cut petrol prices by Rs20 per liter and diesel prices by Rs29 per liter in line with the government’s decision to adjust taxes.
But the government has not honored its commitment so far. According to Upadyay, the state oil monopoly pays the existing taxes as they are. The government only provided Rs 7 billion in the form of an investment loan as per the July 15 Cabinet decision, which it used to pay the dues payable to the IOC. Even now he has to pay billions of rupees to the IOC.
“After the last IOC fuel supply, we have to pay more than 40 billion rupees to the Indian supplier,” Upadhyay said.
The oil monopoly had paid about 17 billion rupees to the IOC in mid-July to reduce its arrears by more than 30 billion rupees. Since then, dues have increased alongside the IOC’s fuel supply, payment for which has not been made by the NOC, according to Upadhyay.