Nepal Oil Corporation (NOC) has increased prices of petroleum products up to eight per cent today.
Petrol will cost Rs 10; and diesel, kerosene Rs 6 more to Rs 140 and Rs 109 per litre from today, whereas aviation fuel (domestic) by Rs 6 more to Rs 143 per litre to adjust losses of the state oil monopoly, according to NOC. "International airlines will have to shell out $1,400 per kilolitre of jet fuel (plus $100)."
The NOC jacked up the price of petrol to Rs 140 per litre (up by 7.69 per cent) and diesel to Rs 109 per litre (up by 8.82 per cent), ahead of World Consumer Rights Day. Fuel prices were last raised six months ago.
However, price of liquefied petroleum gas (LPG) – popularly known as cooking gas – has not been changed and still be available at Rs 1,470 per cylinder.
The government currently subsidises Rs 864.92 per cylinder cooking gas and customers pay Rs 1,470 per cylinder as the real cost of a cylinder of cooking gas stands at Rs 2,334, according to the NOC.
The cooking gas accounts for more than three quarter to 77 per cent of NOC’s loss, which could come down to half if the NOC implements the dual colour cooking gas cylinder system effectively.
But NOC said that it did not have any immediate plans to increase the price of cooking gas, but petrol prices have increased by 25 per cent since January 2012 while diesel and kerosene prices rose by 28 per cent over two years.
Since the NOC is piling up its losses due to rising petroleum prices in the international market, we have to adjust the price upward to cover the losses, said spokesperson of NOC Mukund Prasad Ghimire. "Likewise, the devaluation of Nepali rupee vis-a-vis US dollar has also raised NOC's burden."
The hike in price will lower the ballooning losses of NOC – that stood at Rs 1.69 billion till yesterday due to loss of Rs 10.30 on per litre of diesel and Rs 864.92 on sales of per cylinder of cooking gas – to Rs 1.05 billion per month.
The losses that amounted to Rs 56.57 million daily will come down to Rs 35 million from today, according to the NOC data. " With the price revision NOC will make Rs 11.19 profit in per litre of petrol, Rs 11.38 per litre of kerosene and Rs 33.33 per litre of aviation fuel, though it will still be incurring Rs 5.24 loss per litre of diesel."
Similarly, the state-oil monopoly was also under pressure to settle its unpaid bills amounting to Rs 14 billion to Indian Oil Corporation (IOC), the sole supplier of the petroleum products to NOC by the end of March. The NOC had been asking the government to lend it Rs 5 billion to pay its unpaid dues, the government has not been providing the loss making technically-bankrupt NOC. The corporation owes Rs 34.16 billion in loans to the government and assorted financial institutions.
But the price revision will provide NOC some cushion but the consumers will have to pay more for goods and services squeezing their budget.
The debate on subsidy will again be flared up as the price hike in petrol will spark protest – as always – by the middle class at the cost of the poor in the far western region of the country.
Likewise, the fuel price hike will also flare prices in transport, aviation, auto and textiles as they will increase their freight rates forcing the food and vegetable prices to go up.
The budget has targeted to contain inflation at 8.5 per cent in the current fiscal year but the hike in prices of fuel might make it difficult for the government to crack whip on inflation.
Earlier, on Wednesday, the state-owned Dairy Development Corporation (DDC) hiked milk prices of non-skimmed and skimmed milk by Rs 6 and Rs 8 per litre respectively, followed by private dairies hiking their own rates by Rs 6 per litre on Thursday.
Airfare goes up, transportation fare to go up
Private air operators have increased fuel surcharge due to hike in aviation turbine fuel (ATF) price. The operators are allowed to raise the fuel surcharge when ATF is jacked up by over Rs 4 per litre. A meeting of Airlines Operators Association of Nepal (AOAN) today decided to hike Rs 40 to Rs 230 in fuel surcharge depending on the distance. The NOC today jacked up ATF price for domestic airlines by Rs 6 per litre to Rs 143 per litre. With the increase in fuel surcharge, ticket prices on the Simara sector will increase by Rs 40, while the Dhangadhi sector will see the highest hike of Rs 230. Fuel costs is supposed to contribute 30 per cent to 35 per cent of the total cost forcing the airlines to adjust airfare to remain afloat. NOC is making Rs 33.33 profit on a litre of ATF for domestic airlines. The fuel price was last hiked on September 11, 2013. In the last two years, airfares have gone up by Rs 3,000 on long-haul routes and Rs 1,200-1,500 on short-haul. Likewise, Federation of Nepal Transport Entrepreneurs has also said that they will hike the fare, if NOC won't roll back prices. “If NOC does not roll back the prices, we have no alternative but to raise the transportation fares," it said.
Students give 24 hours ultimatum to roll back price
Political parties, their student wings and consumer groups have warned the government to roll back the fuel price hike. Student unions aligned with the ruling parties – including Nepali Congress and CPN-UML – have taken to the streets against the Nepal Oil Corporation move to hike prices of petroleum products and issued 24-hour ultimatum to reverse the move. Condemning the move, they have also charged the government with promoting inflation rather than controlling corruption and leakage plaguing the NOC.