Ensuring smooth oil supply: It’s a hard nut to crack

SANGAM PRASAIN
KATHMANDU, APR 25 -

Unless the government takes a hard decision, managing resources for oil import is going to become a great headache for it. This is what the oil import in the first nine months of the current fiscal year suggests.

Nepal’s oil import bill during the period has surpassed the the entire last fiscal’s figure. With soaring oil price, the import bill surged by 62.29 percent in the first nine months.

The Nepal Oil Corporation (NOC)’s statistics show that the country imported fuel worth Rs 55.57 billion over the period, against Rs 34.24 billion in the same period last year. Nepal had imported petroleum products worth Rs 51.55 billion in 2009-10. The annual data released by the Nepal Rastra Bank (NRB) showed that petroleum products topped the import chart last year.

With 14-hour daily load shedding and a surge in the number of four wheelers, fuel consumption in the country is increasing every year. Import of petroleum products increased by almost 25 percent in 2009-10, whereas the previous year’s figure was at 17 percent.

According to NOC statistics, petroleum import increased by 11.22 percent in the first nine months of 2010-11. NOC imported 847,884 KL of petroleum products over the period, against 762,334 KL last year. The state oil monopoly says that fuel import is likely to go up significantly with increasing consumption. And, because of the increase in international market price, the country has to doll out more money for oil import.

“With the price in the international market

soaring, monthly import of NOC is likely to touch Rs 8 billion,” said Mukunda Dhungel, spokes-person for NOC.

Govt must shore up oil import: NOC

With the country reeling under fuel crisis and NOC struggling to manage smooth supply citing resource crunch, the Ministry of Commerce

and Supplies (MoCS) said the government has no options, but to continue the import subsidy.

Even though the Ministry of Finance is clearly against releasing more resources to NOC, MoCS officials are once again eyeing subsidy from the finance ministry. “We are discussing the issue with finance ministry on Monday,” said MoCS Secretary Purushottam Ojha.

According to Ojha, neither the ministry nor the NOC can hike petroleum products’ price until the high level petroleum reform task force submits its report. “Therefore, the government should bailout the debt-ridden NOC,” said Ojha.

Finance ministry has already provided an additional Rs 4 billion to NOC to finance oil import in the first nine months of the current fiscal. NOC recently sought an additional Rs 1.75 billion to improve supply.