Pressure to roll back hike mounts

* Minister, NOC GM say not possible

SANGAM PRASAIN

KATHMANDU, DEC 09 -
A hike in prices of petroleum products has always been a sensitive issue. Like in the past, the recent hike by Nepal Oil Corporation (NOC) has invited criticism from all quarters. Political parties, student unions, consumer forums and entrepreneurs dealing in petroleum products are not very comfortable with the recent price hike.

Pressure is mounting on NOC to review the hike. A meeting of Finance and Labour Committee of the Parliament on Thursday asked the state-owned oil monopoly to rethink the price hike.

The main opposition, UCPN (Maoist), has even threatened to launch street protests if the government doesn’t roll back the hike. Rastriya Prajatantra Party (Nepal) picketed the NOC and padlocked its office on Wednesday.

Gas Dealers’ Federation Nepal has announced that it would halt the sales and supply of LPG on Sunday.

NOC had raised the prices of all major petroleum products on Monday, which made petrol, diesel and kerosene dearer by Rs 3 each and liquefied petroleum gas (LPG) by Rs 75 per cylinder (weighing 14.2 kgs).

The Finance Committee’s meeting directed the NOC to resolve the price hike issue through all alternative measures. The lawmakers criticised the NOC’s act of justifying the price hike by showing massive losses every time rather than reforming the institution.

Commerce and Supplies Minister Rajendra Mahato and NOC General Manager Digamber Jha have remained firm against the price hike. Mahato said the gasoline prices were increased in line with the international market and said there will be no roll back. Jha, at the Finance Committee meeting on Thursday, said there were no alternatives to increasing the fuel prices to narrow down the existing loss and ensure smooth supply.

With the Indian Oil Corporation (IOC), the sole Indian supplier of gasoline to Nepal, increasing export rates and the new budget doubling road maintenance fee on petrol and diesel import, the NOC was under sheer pressure to jack up the fuel prices. These two things, according to NOC, increased its losses.

However, NOC has been maintaining that it could roll back the price if the government provides an immediate grant of Rs 400 million. The corporation has blamed the government for the price hike as it increased the road maintenance fee. It also said the government hasn’t waived the Value Added Tax (VAT) on LPG despite its repeated pleas.

Except for a few instances, the government has never withdrawn the fuel price hike. Will it do so this time? The government hasn’t shown any indication so far.

Petroleum dealers and entrepreneurs accuse the political parties of waking up only after price hike decisions. They say the parties do nothing to transform NOC to a transparent and professional institution. “Political parties launching agitations only after NOC hikes the fuel prices is not reasonable,” said an official at the Nepal Petroleum Dealers’ Association (NPDA). “None of these parties show any interest in the institutional reform of the NOC.”

Institutional reform of the NOC has also been recommended by many committees formed in the past. A similar matter was raised by the Finance Committee on Thursday as well, when it asked the NOC to reform its internal management. It also asked the NOC to adopt scientific price adjustment measures in future before deciding on a price hike.

However, suggestions from these committees have rarely been implemented. Corruption, mismanagement and leakages have been the main reason behind the sorry state of NOC.

A report prepared by former Vice-Chairman of National Planning Commission Shankar Sharma stated that the NOC could save a substantial amount by controlling administrative overhead costs, technical losses and shrinkage. “Until and unless the irregularities in NOC are monitored, the corporation would not run healthy,” said an NPDA official.