Gasoline prices expected to increase

SANGAM PRASAIN
KATHMANDU, NOV 23 -

The budget has increased the charge levied on petrol and diesel under the road maintenance and upgrading head which means that Nepal Oil Corporation (NOC) will soon pass the additional burden to consumers.

The budget has hiked the road maintenance and upgrading charge on petrol to Rs. 4 per litre from Rs. 2 and to Rs 2 per litre on diesel from Rs 1, according to an NOC official.

The government has raised these charges as revenue from petrol and diesel for maintenance and upgrading of roads. With the increment, NOC will have to pay Rs 28.44 on a litre of petrol and Rs 11.56 on a litre of diesel as revenue.

NOC general manager Digambar Jha said that the hike in road maintenance and upgrading charges by the new budget has resulted in losses amounting to more than double to NOC.

“The move has compelled us to seek a revision of the existing price structure of petrol and diesel,” said Jha.

The hike has compelled NOC to bear additional expenses of Rs 32 million on petrol and Rs 65 million on diesel each month. The fresh hike will compel NOC to incur a loss of Rs 3.25 on a litre of diesel. The profit on petrol has dropped to Rs. 1 per litre.

The state-owned monopoly had increased the price of petrol by Rs 3 per litre and diesel by Rs 2.50 per litre on July 6. Since then, NOC had been enjoying a profit of Rs 5 per litre on petrol and Rs 0.76 on diesel. “We were optimistic that the new budget would consider the value added tax (VAT) on LP gas. Instead, the budget added a greater on NOC,” Jha added. It loses Rs 144 on each cylinder of gas.

NOC had been requesting the government for a VAT reduction on LP gas for a long time.

The country consumes 16 million litres of petrol monthly while diesel consumption amounts to 60 million litres.

“NOC’s total losses will climb to Rs 187 million per month from the existing Rs 90 million,” the NOC said.

Jha said that the government decision to hike the fuel price was not reasonable. “The increment on diesel will push up transport fares which will adversely affect the market price.”

Petroleum is the government’s largest revenue earning commodity. In the last fiscal year, the government raised Rs 12. 82 billion as revenue from NOC.