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Another panel formed to study petroleum sector problem | Nepali Economy
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Another panel formed to study petroleum sector problem

The Legislature-Parliament today formed yet another committee to study petroleum business.

The 11-member committee – that has been asked to submit report within the next 30 days – has been asked to come up recommendations for oil sector reforms after studying Nepal Oil Corporation’s losses, shrinkages, leakages and administrative costs.

The committee will also take stock of private sector’s ability to handle fuel business and possibility of alternative sources of energy. The government is under pressure not to increase petroleum prices whereas the state-oil monopoly is technically bankrupt and can not handle fuel business until it is completely reformed. Nepal Oil Corporation has not only been under heavy losses but has huge loan, whereas the petroleum pumps have been enjoying profits every year.

The parliament has been forced to form the committee after opposition parties disrupted the house on March 20 asking to roll back the petroleum price hike.

The government has not been able to reform the petroleum business despite formation of earlier seven committees and their report to reform.

The last high-level committee was formed by the cabinet in 2011 led by incumbent tourism minister Bhim Prasad Acharya, who recommended an automatic fuel price adjustment system in line with international prices, a price stabilisation fund and bringing private sector in the petroleum business.

The government has also planned to provide limited subsidies on LPG – popularly known as cooking gas – but the plan also could not be materialised due to syndicate between the dealers and NOC officials.
Currently, technically bankrupt NOC has borrowed Rs 34.16 billion from different banks and financial institutions. As the state oil monopoly is fleecing the consumers and pampering the dealers, the future of the NOC is uncertain.

The unholy nexus between NOC staffer and petroleum dealers is also clearly seen in fuel transportation that has never followed competition in fuel transportation to fix transportation costs.

However, a member of the new committee Rabindra Adhikariclaimed that they will study current regulation and identify loopholes to allow competition in the petroleum business.