“Petroleum prices will rise as long as Russia-Ukraine war rages on” « Khabarhub
Monday, June 24th, 2024

“Petroleum prices will rise as long as Russia-Ukraine war rages on”



KATHMANDU: Nepal Oil Corporation (NOC) recently submitted a 10-point suggestion to the Prime Minister’s Office and the Ministry of Commerce and Supplies to reduce fuel consumption.

The board meeting of the Corporation decided to send a 10-point proposal to reduce the consumption immediately, saying that the fuel supply may be affected due to the ongoing deficit.

According to the NOC, the government has not provided the required resources during the crisis. In a 10-point suggestion, the corporation has suggested to the government to provide electric stoves at concessional prices, impose a fuel quota system, and provide 5 liters of fuel at a time to bicycles and 20 liters of fuel to cars and small vehicles.

In this context, Khabarhub’s Dhiraj Basnet approached NOC Co-spokesperson Pushkar Karki to find out the Corporation’s version of the 10-point suggestions and the sky-rocketing petroleum prices. Excerpts:

What made Nepal Oil Corporation submit 10-point suggestions to the government?

Consumption of petroleum products is increasing at the rate of 10 percent every year. However, in this difficult economic situation, consumption has increased by 70 percent.

Because of that, the nation’s money has to be spent a lot on the procurement of petroleum products. Petroleum consumption will have to pay Rs 30 billion.

We have not been able to pay that. Therefore, we had given 10-point options to reduce the consumption of petroleum products.

NOC is meant to sell petroleum products. Doesn’t its suggestion to reduce sales sound contradictory? Does it indicate a looming crisis?

We had submitted 10 points suggestions to the government earlier as well. A few months later, the consumption had slightly declined. As there is a crisis all over the world, we have said that the consumption of petroleum products should be reduced no matter what the situation is.

Russia has given oil to a country like India and China at a cheaper price and how can India sell it to Nepal at a higher price?

We do not buy from crude but finish from the Indian Oil Corporation. Its cost has now increased worldwide. Due to that, the price went up and the cost was high.

This fiscal year it has been Rs 52 billion, we have asked Nepal Rastra Bank not to import more than Rs 12-13 billion per month. The consumption has been more than Rs. 30 billion.

Why has the oil India procured at a cheap price been expensive to us?

We have not received oil from Russia yet. We have used oil brought from the Gulf countries. However, the Nepal government has also taken the initiative to import oil from Russia.

NOC submitted a 10 points proposal for ‘petroleum consumption reduction, will not the country come to a standstill if your proposal is enforced?

We do not mean that all points of our proposal should be enforced. We request to decide quickly on the major ones. We have emphasized foreign exchange reserves by reducing the consumption of petroleum products and promoting electronic gadgets.

Schools were closed in Sri Lanka due to a lack of oil. Is Nepal in a similar situation?

Sri Lanka had zero foreign exchange and could not consume petroleum products. The storage condition of Nepal is not like that. Nepal has foreign exchange reserves lasting more than six months.

Petroleum prices rose again. Has the increased price list come from the Indian Oil Corporation?

The price has been increased by the Nepal Oil Corporation. The cost of buying from India a year ago was Rs 52/53 per liter. But now it has doubled to 133. At present, the price of petroleum products is Rs 211 and we have given it at Rs 181. There is still Rs 30 loss in a liter.

People expected a sense of relief after the tax deduction on petroleum products, why has NOC increased the price?

The Council of Ministers has decided to adjust the price of petrol and diesel. Therefore, the loss is likely to be compensated by mid-July. Looking at the world market, prices have risen steadily over a period of about 20 months. Russia’s oil will not enter the world market until the war between Russia and Ukraine ends. The war is likely to take the price further higher.

Does NOC have any substantive plan to face the situation provided the price of petroleum products still goes up?

30 billion remains to be paid to Indian Oil Corporation. Until then, it reduces the supply of petroleum curtains. Which increases the demand in the market. Therefore, to stop this, we have demanded the Government of Nepal reduce the consumption of raw materials.

Many people say that the NOC has been allotting bonuses to the staff despite bearing heavy losses each day. Doesn’t this issue get any attention in the NOC meeting?

No bonus has been provided to any employee since 2001. We have also cut many facilities. We have calculated the profit and loss every 15 days. Many organizations have done the research and have all the data.

What happens if the government does not implement the 10-point suggestions?

Even before this, we had given various suggestions. The rule of giving leave two days a week was also enforced. Based on that, petrol consumption was reduced by 13 percent and diesel by 5 percent in June. Therefore, we have the objective of reducing consumption in any way we can.

Publish Date : 08 July 2022 08:37 AM

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