Oil dealers urge formation of petroleum board to ease crisis

SANGAM PRASAIN
KATHMANDU, APR 22 -

With the fuel crisis intensifying and the government showing unwillingness to adjust prices, the Nepal Petroleum Dealers National Association (NPDNA) has demanded forming a high-level powerful petroleum board.

The NPDNA on Thursday said that the issue of petroleum pricing and supply would be resolved by setting up such an independent body. “Spiralling oil prices in the international market are unlikely to stabilize immediately,” said NPDNA president Saroj Pandey. “Revising petroleum prices in Nepal once will not help settle the issue. Hence, there should be a permanent mechanism.”

According to the NPDNA, the proposed board would be given the right to recommend appropriate policies on the import, quality, pricing and sales mechanism of petroleum products to the government.

The NPDNA’s suggestion for a petroleum board is in line with what the high-level Petroleum Sector Reform Taskforce is mulling. The taskforce is also currently discussing setting up an independent body to fix prices. The NPDNA said the idea of forming an independent body was appropriate. It has also suggested to the taskforce to include a representative of the dealers in the independent body. The NPDNA has called for reducing the tax imposed on petroleum products. It has suggested imposition of multiple VAT on petroleum products. “There should be 6 percent VAT imposed on petroleum products,” said the NPDNA. In the last fiscal year, the government collected Rs 12.26 billion in taxes on petroleum. This year, the revenue is expected to touch Rs 16 billion.

The NPDNA has also suggested to the taskforce to scrap the VAT refund on petroleum products provided to various industries. Currently, big hotels, restaurants and industries are benefiting from this subsidy regime. The NPDNA criticized the government’s providing subsidies to Nepal Oil Corporation (NOC) instead of allowing it to adjust fuel prices in line with the international market. “The use of the development budget for the import of petroleum products is not right,” said Pandey.

In the last few months, the government has been bailing out cash-strapped NOC with loans to maintain regular fuel supplies in the country. The government has provided it Rs 4 billion to import fuel in the first nine months of the current fiscal year.

The Rs 1.5 billion that the government provided to NOC recently was diverted from the development budget allocated for the Rural Area Professional Development Programme.